You need to hire a trademark litigator to review this in specific detail in confidence. There are many options that can be pursued, and which one is best strategically depends on the facts. An opposition proceeding, a letter of protest to the examiner, a lawsuit with request for injunction, a simple CDL from your attorney, a UDRP proceeding, a reduced price offer, or some combination of those may be considered along with other more aggressive steps to pressure the counterparty. This opponent is being unusually aggressive and optimum response requires expert assistance as this can backfire if done improperly.
I am not your lawyer and you are not my client. Free advice here is without recourse and any reliance thereupon is at your sole risk. This is done without compensation as a free public service. I am licensed in IL, MO, TX and I am a Reg. Pat. Atty. so advice in any other jurisdiction is strictly general advice and should be confirmed with an attorney licensed in that jurisdiction.
Yours is a very fact intensive scenario, but it sounds as if there is some serious confusion regards to trademark law.
There are definitely some tactics you can employ assuming you were using the mark first even if you made no federal registration, but this is something you need to discuss with a lawyer in private first to all the facts are clear. I would also want to make sure that the mark in question is actually protectable and not merely descriptive or generic.
Further, whenever you endeavor into investing in a trademark it is very important that you conduct the proper clearance due diligence upfront and before you submit an application to the USPTO. In the US, this means searching under both federal (USPTO) as well as common law because trademark rights stem from use in this country NOT registration. This means that acquiring a federal registration does not necessarily mean that you are not infringing on another's intellectual property. See the link below for a detailed explanation of the due diligence process.
I suggest that you consult with a lawyer in private and discuss your objectives in more detail. You can start by calling around to several for a free phone consultation, get some insights then pick the best fit to work with.
DISCLAIMER: this is not intended to be specific legal advice and should not be relied upon as such. No attorney-client relationship is formed with the law firm of Natoli-Lapin, LLC on the basis of this posting.
Trademarking a name without it being attached to a trade or service (or being done on an intent to use basis) is not permitted. First in use in commerce establishes priority.
Your remedies will depend on numerous factors and require a local business or IP litigator. It is not an Avvo do it yourself project.
The above is general legal and business analysis. It is not "legal advice" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also avvo.com terms and conditions item 9, incorporated as if it was reprinted here.
1. You don't stop his application. You cannot stop his application. You contest his application.
2. If you have been "in commerce" for two years, do you mean that you have sold goods in that time? use in commerce means ACTUALLY SELLING GOODS OR SERVICES.
3. Did you register your mark with either the State of New York or the USPTO?
Clearly there are some facts at issue here that need to be resolved, and it seems to me that you are not equipped to handle the trademark contest on your own. See one of the attorneys here in the city that has experience with Trademark Registration and Trademark Litigation both before the USPTO, and WITHIN the state of New York, since there are additional state trademark protections.
It will be worth the money.
Ask about damages and injunctions when you speak to the attorney.
This does not constitute legal advice or the engagement of my services as an attorney.