Trademarks are per area of commerce, not absolute.
McDonalds can stop you from running a McDonald's Hotdog Shop, but they can't stop you from running McDonald's Plumbing.
Before you capitulate - is Foo a very obscure word, or is it fairly common?
Are you blatantly cybersquatting?
Are you using the site for anything?
If so, is you area of commerce overlapping with Foo Inc.'s?
Is Foo Inc. willing to buy the domain off you?