Yep, I can see how they could feel they had to issue a c&d. I still feel bad for Mazz, who was only trying to do fun stuff with other fans- but the recent BBC press comments should help calm the panic among other fan-knitters.

The previous quote from BBC Brand Protection was "Sales of genuine merchandise are used to fund the BBC, meaning that expensive high-tech programmes like DR WHO can be made. If everyone was allowed to make their own DR WHO merchandise then BBC would get less revenue and series like DR WHO might not get made."
Which is idiotic, so apparently their PR people have stepped in now with damage control.