In contrast to the flaming and the rants seen elsewhere, I decided to examine the context of the Cease and Desist order, and examine the possibility of precedents. While the $150,000 fine sounds quite scary, it is not arbitrary. In cases of willful copyright infringement, with the intent to profit from such a work, and with direct damages shown to the company, there is the possibility of fine. However, in order to do so, the company would first have to prove to a court that A. The project has directly damaged the sales of the game, B. That there was the intent to profit, and C. That the alleged infringement does not fall under the fair use clauses of copyright law, which protects certain derivative works.
The instructions to shut down the parts of the site, in relation to Temporal Flux, are only valid if that section included instructions on the removal of copy protection from the cartridge itself, and under the Digital Millennium Copyright Act, would only apply to rom dumping, not the editing of content within the rom. The Act's purpose is to prevent the illegal copying of content, but the act does not apply to the modification of files.
The question of liability in terms of the leaks is questionable. If it is shown that the you, and those whom this letter is specifically addressed to, namely messrs x,y,z... etc are willfully responsible for leaking the content, then if they can prove in court that it was you, you could face a limited fine. If the content was leaked by a beta tester, then they would be held liable as an individual, however your group would not suffer any penalty, unless it was shown that you deliberately and willfully contributed to the leaking of said material. The question of whether their litigation counsel would pursue the case, or any case would be a up to them, and would have to weigh the positive and negative impacts of pursuing such a course of action, as well as the likelihood of winning in the local court for the individual who leaked it, and the legal costs involved as well.
They stand on much better legal ground in terms of preventing you from distributing your project, but the demand to remove the instructions on Temporal Flux has little legal basis on it. While I would advise you to seek free legal counseling, a partial compliance would be the best bet, comply with delaying the release, but I would strongly advise against the destruction of any content. In fact, at this point it might be best for this to actually go to their litigation counsel, who would probably be more likely to listen then the legal team which assembled the letter, which in many companies is at the bottom of the food chain. Again, I cannot state strongly enough how important it is to get free legal counsel, which is offered by several groups including Justice Corps, to name an example in the United States.
It must be kept in mind that copyright law is not internationally universal, and that different countries have different laws in place regarding what constitutes fair use. The letter is legally sound to a point, however one must gain a clear understanding of the situation prior to committing to any action, and requesting a face to face meeting might not be out of the question, and may in fact yield more encouraging results, while in a worst case scenario, the results will be the same as they currently are.
Sincerely,
D.S.
UCLA