As someone who has dealt with this I suggest you figure out a way to avoid the patent. Read through the claims, figure out what combination of features they have patented and then change your product to avoid those features in that combination.

You likely can either do something more advanced or something less advanced -- if you have the choice do the more advanced solution as you are then likely pushing your product even further.

Fighting patents is for rich, established companies. You do not have the luxury.

You should change your product immediately to avoid infringement, or even close to infringing. If you do this you can avoid damages/claims against you.

Because you didn't know you were possibly infringing, you can avoid all claims/damages by immediately changing your product.

When you respond to them, you should say you didn't realize you were possibly infringing as you were not aware of the patent, you should say that you do not believe you were infringing, but anyhow you have modified your product to clear up any possibility of claims of infringement going forward.

You do not want to admit any guilt in anyway (actually the rule is NEVER admit guilt, always claim you believe you are not infringing), and you want to get away from these people because they are not worth your time.

But if you do need to use this tech, you should try to license it, but while claiming you are not infringing and there are alternative methods you can adapt. This gives you the most powerful stance. Make sure they understand you are very small and thus not worth dragging this out. Offer them something for a one time fee if possible and get than done and move on.

But avoiding the perception of infringing going forward is best.