Legal Question in Intellectual Property in California

First, I think you need to adopt a mental attitude that you made a mistake - innocent, to be sure (at least presumably), but nevertheless you did use someone else's property.

Next, I think your response - taking measures to clean things up - was and is commendable and should be recognized by the owner of the picture. You seem to have done and be doing whatever is possible. This is definitely to your credit and if you have truly done whatever you reasonably could to "take down" the copies of the photos that could be attributed to you, then you have established a pretty good defense. Frankly, based on the facts givem, I don't know why the owner of the picture is being so crabby.

Does the owner have a right to sue? Of course. Will it? I'd guess not very likely. Would it win? That's another question, too. It is very easy and very cheap to threaten. It is relatively easy and cheap to file a lawsuit. Winning a lawsuit, in any significant way, requires more than just coughing up a filing fee and cobbling together some allegations. Among other things, unless there is a willful violation of a registered copyright, there will be no penalty other than damages the photo owner can prove it has suffered, and it doesn't seem your use of the photo has cost the owner sales of the photo itself or any product or business opportunity the image in the photo represents.

With more facts I might advise otherwise, but I'd continue to cooperate and answer each e-mail politely, contritely and accurately, but beyond that I wouldn't worry too much.

If you are served with a lawsuit, however, you must shift gears and obtain counsel to defend yourself.

Bryan gave an excellent answer. I would just add this:

The person who took the photo has a copyright therein. This is automatic. You don't need to file with any government agency to have the copyright.

However, there is an additional procedure a copyright owner can undertake: to register the copyright with the US Copyright Office.

If the owner undertakes this action before there is an infringement, then the owner will have some very substantial additional legal rights, such as "statutory damages". Those are available against someone who infringes a registered copyright. If on the other hand the copyright was NOT registered at the time -- which is statistically very likely, as very few people take this step, relatively speaking -- then it is unlikely that the owner will have any substantial legal remedies against you. How could they have been damaged? It is hard to figure that out.

So, you might want to go to the US Copyright Office website and try to search to see if the copyright is registered. If it is, there is considerably more to worry about, if the registration took place before your usage. If it is not, that may give you some comfort.

Good Luck !!