" I originally searched the net when i started the business, to find that there was one other similarly named small business at a distant location. Lets say i am thebusiness.com and this other small entity was business.com." ... "We have almost identical services, but slightly different business names. The only difference is mine starts with "the"... "
I doubt there are any circumstances where inclusion of the word 'The' will cause you to not be considered infringing a Trademark of a Sr. User (i.e., user that was using a Trademark in commerce prior to your use... Depending on the mark (and don't tell us here) unless the mark is the generic name for a product/service, or extremely descriptive of the product or service, you are probably out of luck (but see below)...
"It had no laws protecting it's name at the time."
As soon as someone begins using a mark in interstate commerce, they are protected under certain Federal Statutes, even if they haven't Registered their Trademark with the US Patent and Trademark office. Their use is also protected under the Common Law.
" They claim to have legal access to the original creation date of that previously owned business since they have purchased it."
I see no reason why they cannot claim the Legal Priority of a prior user, but perhaps anopther could chime-in to confirm this...
" I feel like a corporate giant is abusing it's power by trying to make me feel threatened... If I am thebusiness.com, can they file an infringement lawsuit against me?
"I am dis-heartened by the fact that all I have put all my effort into can be thoroughly demolished by another company because I'm the little guy."
When a business adopts a Trademark, they have an obligation to make sure that they haven't adopted a trademark that is likely to cause confusion with another trademark in existence. Though it sounds like you tried this (and actually identified the Tradeamrk that is now giving you problems), your misunderstanding of Trademark Law failed to 'raise the red flag'... As I mentioned above, I doubt that your mark is saved by the fact that you added the word 'The'
Dependingon the particulars (again, we don't want those here), the big business is just policing it's trademark rights- Something it must do to protect their Trademark Rights.
The fact that you began using your mark before the other Mark began the Federal TM Registration Process *might* help you, if the other company knew that you were using the mark in commerce a couple of years ago, and failed to act. However the fact that you knew of the other mark when you adopted your mark would seem to weigh heavily against you. Not sure how that balancing act would come out.
As Spielman mentioned, it would be adviseable to get competent Trademark Counsel, inespecially if there are circumstances here that would support your use of the Trademark.
Good luck.
Not to be construed as legal advice.