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Paypal can take money for theft and fraudulent sales pursuant to their terms of service or they would hold an account until served with a judgment. This ability is part of the Paypal Terms of Service and if you read those you will find that right in there.
If you have been served with a suit, before you do any more negotiations, you need to file an Answer within the time frame indicated on the summons you received, regardless of the fact you are still negotiating. Filing the answer stops the plaintiff from getting a default judgment against you.
Once you file your answer to the suit, then you can negotiate with them to try to get this matter resolved and settled.
If you are a company, then you need to have an attorney by US law to answer the suit. You can find a trademark or intellectual property attorney at the same sites used by other attorneys, http://www.martindale.com or http://www.lexmundi.com or http://www.hg.org
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