Chances are at some point your business may send or receive a cease and desist letter. This is particularly the case with businesses which have a substantial intellectual property component. Some companies believe it is important to send out these letters to vigorously protect their IP and will, as a regular part of their business, frequently take actions like sending out cease and desist letters to protect their IP assets. Also, the business strategy of some companies is to create barriers to entry against competitors or to place road blocks in front of disrupting technologies. A cease and desist letter is often the first step in a corporate battle to protect a product, service or market share when the owner of IP thinks a potential competitor is infringing. Since the recipient of a letter will often not have any advance knowledge that its IP may arguably infringe on the IP rights of another company, before going into a panic, or completely ignoring the letter, businesses should be aware of what a cease and desist letter is, what it isn’t, and how to respond appropriately. Likewise, a business thinking about sending out a letter should understand what it can, and can not do.
Cease and desist
- Telling someone to stop doing what they are doing and fix the alleged harm they’ve caused
- Warning of a potential lawsuit
What they aren’t:
- Legally binding
- Guarantee of a lawsuit
These letters are essentially the opinion of the attorney representing someone who feels threatened by the actions of another. There may, or may not, be substantial merit to the infringement claims made in the letter. Also, where the claim does have real merit, many businesses prefer to avoid going through lawsuits, so they send these letters as a fist step in an attempt to alarm people and notify them to stop what they are doing, without spending extra money.
A cease and desist letter can be sent for many reasons, but the most common are:
- Formally telling someone to stop an action...stop infringing on another's IP
- Inform the recipient that the sender is feeling harassed by the infringement of its IP
- Notification of a claimed copyright or trademark infringement
In the business world it is frequently a case of copyright or trademark infringement. One person had the idea or product first, and another person tried to use it. Often, the person receiving the letter isn’t aware the alleged violation. A cease and desist is a good way to formally notify a competing business of an infringement on a patent or trademark.
One way to avoid a cease and desist letter is, if practical for a new business, by doing research before starting a business or creating a product to be patented or trademarked. The IP might already exist, and doing some research beforehand can save a new business a lot of trouble and expense. Similarly, a business considering sending out a letter has to make a cost benefit analysis about whether the probable infringing business and the infringing IP are important to confront. And sending an Cease and Desist letter is the least expensive way to try to halt an infringement.
Cease and desist letters aren’t always avoidable. So when should a business that receives one take them seriously? Actually, cease and desist letters should always be taken seriously, even if the claim turns out in the end not to have substantial merit. If you are infringing on another's IP rights, there can be very serious consequences if the infringement continues, especially after you've received notice that there may be a real claim. That’s why contacting an attorney right away is the best decision. A business lawyer experienced in these matters can help you decide when it is appropriate to send or respond to a cease and desist letter.
If you're thinking about sending a cease and desist letter, Gerard Fox Law can help you decide how to proceed based on the importance of protecting the IP at issue. If you've received one, we can help you decide on the best course based on the evidence given in the letter.