Receiving a “cease and desist” letter from a lawyer can be stressful and sometimes confusing, and it’s not always clear whether and how a person should respond.

A “cease and desist” letter or “demand” letter is a letter, usually from an attorney, that accuses you of doing something improper or unlawful and demands that you stop (or “cease and desist”) the unlawful conduct. Such letters are often sent by someone alleging copyright infringement, trademark infringement, or patent infringement, but they can also be used in breach of contract situations, defamation claims, and many other civil causes of action. Occasionally the letter will also demand payment of some settlement amount, or it may request the production of certain documents or information.

Why do lawyers send these letters?

The most common reason someone sends a cease and desist letter is simple efficiency: a letter is simpler and cheaper than a lawsuit. If someone has been wronged or believes they have suffered an infringement of their intellectual property, most attorneys will advise their clients to send such a letter before taking formal legal action by filing a lawsuit. While such letters are not always successful, in the cases where they are successful, a client can save thousands of dollars in legal fees if the infringement or other offending conduct is stopped by the sending of a simple letter, as compared with the cost and complexity of filing a lawsuit. In some cases, the issue may be minor enough that the client would never think of actually filing a lawsuit, but they nonetheless are willing to try to get the problem resolved through a letter.

But there are numerous other practice-specific reasons to send such a letter. A few examples are:

  • Patent Infringement: Many patent disputes are resolved through a licensing arrangement, where the patent holder can get paid for an infringer’s use of patented technology. A patent holder may send a demand letter in hopes of negotiating a favorable license, even if he has no intention of filing an infringement suit.
  • Breach of Contract Cases: Occasionally a breach of contract issue will turn on which party breached its obligations under the contract first. In these cases, a strategic letter memorializing another party’s prior breach might be used as some evidence of that party’s prior breach, supporting the prior breach argument at a later trial.

Although this list is not exhaustive, it hopefully illustrates the point that not every cease and desist letter means that you are going to get sued. That being said, some of them likely to mean just that.

So What Should I Do If I Receive a Cease and Desist Letter?

There is no “one size fits all” answer to this question. If it turns out that the letter was sent by a trademark owner who was just trying to create a paper trail to avoid abandonment or genericide, it might be fine in some cases to just ignore the letter. But if the same letter was sent by the same trademark owner in an attempt to avoid having to file a trademark infringement lawsuit by reaching an early settlement, then ignoring the letter would likely result in a lawsuit being filed.

The challenge attorneys face in trying to counsel clients on the best way to respond to such letters is primarily that we don’t fully understand the other attorney’s motivations for sending the letter in the first place. To that end, the first thing I typically do in reviewing a cease and desist letter for a client is look for clues about those motivations. The types of clues vary from letter to letter, but I generally consider things like:

  • The tone of the writing: How aggressive is it?
  • The claim of damages: How specifically are the claimed damages conveyed? How high is the dollar amount?
  • The threat of further action: Does the letter say that the sender “will file a lawsuit” or something more vague like, “will take appropriate action”?

Then, it is helpful to do some independent investigation as to the nature of the dispute. Look at the competing trademarks, infringing website or product, and the businesses of both parties. Does the sender appear to have a legitimate claim for significant damages? Does the sender appear to have the resources to actually pursue this matter through litigation?

Finally, before preparing a formal response, it is sometimes beneficial to pick up the phone and call the other attorney, perhaps to ask for additional time to prepare a formal response, but also to generally inquire as to whether and on what terms the sender’s client would be willing to resolve the matter without litigation.

There truly is no “one size fits all” response to a cease and desist letter, but many clients think that their choices are limited to just agreeing to the other party’s demands or taking the matter to court. However, with careful analysis of the letter itself and the facts and circumstances surrounding the dispute, often a tailored response can be drafted that can seek out some middle ground, resolving the matter without fully conceding to the sender’s demands but also avoiding litigation.

(x-post from Betalaw)

Posted in: Commercial Litigation