What to Do If You Have Received a Cease-and-Desist Letter
The letter is not a court order and on its own is not legally enforceable. Therefore, there are no immediate repercussions to non-compliance. However, if ignored, the recipient risks that the situation will escalate and the sender will start a legal proceeding against them. In some cases, the letter opens a pathway for negotiation between the sender and the recipient (for example, negotiating a licensing deal on a patented product).
How to identify whether you've received a cease-and-desist letter
Cease-and-desist letters do not have to follow a specific format, but they often have common features. The first and most obvious one is the use of the phrase "cease and desist" in the letter.
A cease-and-desist letter will often be multiple pages and will outline the alleged infringement in detail. The letter also generally includes a reference to the sender's intellectual property, like a patent number, copyright registration number or trademark registration number. In most cases, the sender will also include copies of the patent or copyright or trademark registration as an enclosure.
The cease-and-desist correspondence may be written on the letterhead of a law firm, but alternatively could be written by the intellectual property owner itself. If the letter is written by a lawyer, consider that the sender has already financially invested in enforcing its intellectual property rights and may be more serious about commencing legal proceeding against you if you do not comply.
Other identifiers of a cease-and-desist letter are partiality to the owner's legal position (i.e., citing specific facts and arguments in favor of the sender's position), a list of demands and a request for confirmation of receipt. Generally speaking, cease-and-desist correspondence also includes a deadline for complying with the demands.
A cease-and-desist demand need not in the form of a hardcopy letter sent by mail. The demand can come electronically, not in the format of a formal letter, or alternatively could be in the form of a telephone call.
If the correspondence you receive comes from a court, rather than a lawyer or an individual, then it is not a cease-and-desist letter. If you receive a court order, you must comply with the order or you risk being found in contempt of court. If a letter is accompanied by court documents (which are not marked with the notice "draft"), then it is likely not cease-and-desist correspondence either. It may be that legal proceedings have already been commenced against you. If you are unsure of the nature of document you received, it is best to seek the advice of a lawyer.
Next steps after receiving the letter
Once you have ascertained that the communication you have received is or is likely a cease-and-desist letter, it is important to decide on a course of action. While there is typically no legal penalty for ignoring a cease-and-desist demand, doing so is generally ill-advised. It is best to evaluate the letter to assess whether the sender actually does have the intellectual property rights that it claims to have, whether you are the appropriate recipient of the letter, whether the sender's allegations of infringement are valid, whether you have any reasonable defences to the allegations, how likely any claim based on the allegations would be successful in Court, and what the financial consequences to you might be.
The letters are often written using legal terminology specific to that area of law with the risk of misinterpretation by someone without legal training in that area, so it is helpful to seek legal advice when you receive one. A lawyer experienced in intellectual property can evaluate both sides of the presented case and give you their view of the likelihood that further legal action will be pursued. They can also help you decide the best course of action and, if necessary, help prepare a response. If you wish to book a consultation with us regarding a cease-and-desist letter, please contact us for an complimentary initial telephone appointment.
While a cease-and-desist letter may come as a shock, it is important to stay calm and not to respond immediately without careful consideration of possible consequences. Any comments you make to the sender or on social media could be used against you in future litigation. As such, before a plan of action is determined, it is best to avoid publicly discussing the contents of the letter or your reaction to the letter. It is also key to keep a copy of the letter even if you choose not to respond or take any action, as all materials should be preserved in the event of a future lawsuit.
In addition to consulting a lawyer, you may also want to discuss the situation with any business partners or other individuals that may be affected by the course of action that you choose to take. Consider how complying with the listed demands may affect your revenues, profits, brand and reputation; also consider the cost and likelihood of a potential lawsuit and conduct a cost versus benefit analysis to determine which route may be less costly and damaging to your future prospects.
Evaluating your options
Comply with the demands
After evaluating the demands set out in the letter, you may decide that the sender has a valid case for litigation, that a potential lawsuit would be more costly and undesirable than compliance, or that the demands are reasonable, and you have no problem complying.
Complying with the conditions set out in the letter usually results in the sender not pursuing further action, and thus closes the matter. However, this is not always the case.If you choose to comply with the letter, it is important to notify the sender of your decision and, if relevant, the time frame in which you plan to comply with their demands. It is often best to enlist the help of a lawyer in drafting the response to ensure that your compliance does not prompt further demands and that the dispute is adequately resolved. If you want to ensure that the sender does not sue you for any past infringement, you can have your lawyer draft a settlement document with language that would release you from liability for past activities
Ignore the letter
If you have evaluated the letter and determined that there is no cause for concern, you may decide to ignore the letter altogether. This option should only be taken after the letter's claims have been properly considered. While ignoring the letter may not have legal consequences, the sender may keep sending you further correspondence, and may eventually decide to pursue legal action against you.
Even if you think the sender does not have a case, you may still want to respond to the letter, setting out your position and explaining your reasons for non-compliance.
Negotiate to arrive at a mutually acceptable outcome
After evaluating the letter and its legal and business implications, you may find neither of complying with all demands that have been set out norignoring the letter altogether is the right plan of action. In this case, a further option can be to enter into negotiations with the sender to arrive at a mutually satisfactory resolution. Some examples include negotiating a licence to use the sender's intellectual property, negotiating a different timeline for complying with the demands in the cease-and-desist letter, or only complying with some of the demands, rather than all of them.
This option, of course, depends heavily on whether the sender of the cease-and-desist letter is willing to entertain a settlement that will typically involve a compromise by it from its initial position. If you choose this option, it is wise to enlist the help of a lawyer to guide you through the complexities of the negotiation process and ensure that you arrive at your desired outcome.
While a cease-and-desist letter is not legally enforceable on its own, it should be seen as a cause for concern and evaluated properly. When you have identified that the communication that has been sent to you is indeed a cease-and-desist letter with a specific action requested, it is important to establish what legal and financial implications this has for you and/or your business. Since most cease-and-desist correspondence has a fairly short timeframe for responding, it is advisable to contact a lawyer right away upon receiving the letter to help you with the analysis.
There are some preventative steps you can take to minimize your chance of receiving cease-and-desist letters. Investigating the likelihood of third party conflicts at the start of your business activities is often the best way to avoid receiving a cease-and-desist letter. When developing a product, you can hire a lawyer to conduct a freedom-to-operate search to make sure that the product does not fall within the claims of an issued patent. Before you start using a trademark or trade name, you can have your lawyer do a trademark clearance search to find out whether you are free to adopt and use the mark without infringing any registered trademarks. Checking for identical or similar common law or unregistered trademarks, domain names and corporate names may also help reduce the risk of receiving cease-and-desist correspondence. Moreover, if you plan to use or reproduce even part of a copyrighted work, a lawyer can help assess whether or not you will be infringing someone else's copyright.