Honestly, the letter is strong but not scary. It's strong because a strongly written letter is there most effective
The key points are:
1. They don't want to sue you.
2. They want the instrument back.
3. They know you paid money for this item and will expect to be made whole again.
Based on the department, my guess is it contains a preproduction or custom firmware and/or hardware. Possibly unencrypted test firmware, custom options, or something like that; we may never know specifically why.
Keep in mind, made whole means compensated not just for the physical instrument but for the time you are unable to utilize it or a replacement. In a business setting, the latter can be a substantial amount; for a home hobbyist not so much. Also, you should be compensated for any and all time used to package up the item and ship it (if they don't use a service to get it). Lastly, by cooperating with them, you are also doing them a favor, lawsuits are expensive! Don't let them make you think they are only doing you a favor by not suing.
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