Keep pummeling them. There's no integrity behind this, and going along will just let them get away with their bad behaviour.
They played the "We'll sue your ass off" card first. That means it's already in the legal realm, they never even triedto work with the OSS community, they basically said "fuck you" until the community replied, very clearly.
Had the community not responded by replicating the repo 1000+ times, and making a story about it, they would've continued down the path of slapping the little guy around.
They now realize they can't compete with potentially 1000 people working on this, against them. They also fear they've pissed off some technophile who has some serious skills or connections. Wonder if they saw a sudden increase in probes on their internet interfaces.