Here’s the relevant part from the post:
A few weeks ago Twitter contacted our legal demanding that we abandon our trademark application or risk losing access to their API. This came as a shock to us since Twitpic has been around since early 2008, and our trademark application has been in the USPTO since 2009.
Twitpic had recently overcome the last obstacle to its application when Twitter contacted the company during the “published for opposition” phase. Twitpic founder Noah Everett wrote that, since Twitpic doesn’t have the funds to face off against Twitter, the company decided to shut down instead.
In the next few days, Twitpic plans to release a feature to allow users to export their photos.
Update: A Twitter spokesperson provided the following statement:
We’re sad to see Twitpic is shutting down. We encourage developers to build on top of the Twitter service, as Twitpic has done for years, and we made it clear that they could operate using the Twitpic name. Of course, we also have to protect our brand, and that includes trademarks tied to the brand.