Other than to call an attorney, it’s hard to say exactly what I would
do without more info. I’m going to guess that you made the original
pieces in the first place, so unless you have some molds that
belonged to her, it might be difficult for her to prove you are
selling designs that belong to her. Difficult, but not impossible.
It might be even more difficult for her if the designs are not
copyrighted or trademarked, or if they don’t clearly bear her
signature design style or some other distinguishing or unique
manufacturing technique. That doesn’t mean she won’t get heavy
handed, or that you are free and clear, however.
Just because she has no case doesn’t mean she can’t sue you and win.
My only advice with what you have told us so far is to do your best
to stay out of court. Talk it out with her and try to come up with
something you can both live with if at all possible, but if the
words “lawsuit” or “court” or anything related to the legal system
come up, don’t walk, run to your attorney. High power, high dollar
trial attorneys get that way because they can make the innocent look
like thieving, scamming scoundrels that hate puppies, and the guilty
look like angelic, helpless children that just got their candy bar
stolen by the mean old puppy kicking man. Guess which one you will be
portrayed as, and the judge won’t be interested in the pictures of
you and your dog. Don’t wait for the sheriff to knock on your door
and hand you a summons. Take any threats of legal action very
seriously, and be proactive.
If you can’t come up with an agreement that you are both OK with,
talk to a lawyer as soon as you can. I’d talk to one anyway. It
costs virtually nothing to sue someone, especially if a hot shot
lawyer offers to handle it on contingency, but the cost of defense
can be extremely high, even if you win. After all, your attorney gets
paid either way. Be careful you don’t spend $10,000 to beat a $2000