What to do when you receive a cease and desist letter

How to Send/Respond to a Cease and Desist Letter

First of all, you should consider engaging a lawyer to write a cease and desist letter for you. Don’t rely on free online templates as they may not cover properly what you’re asking for, and it may cause issues if the matter later goes to court.

The letter can be sent either by email, by post, or both. We recommend the parties to be clearly identified on the letter, as well as the background of the dispute and your demands.

How to respond to a cease and desist letter?

You should take any receipt of a cease and desist letter seriously and you must act quickly. Failing to abide by the demands of the letter may result in legal proceedings being commenced against you which can be both timely and costly.

It is important to note that just because you receive this type of letter, it doesn’t mean that your conduct is actually in breach of or infringing anything.

We recommend obtaining legal advice as soon as possible if you receive a cease and desist letter.

This article is directed at recipients of cease and desist letters. If you are an intellectual property rights holder thinking about sending a cease and desist letter, see our article, I Think My Intellectual Property Rights Are Being Infringed; What Now?

An IP cease and desist letter often precedes intellectual property litigation. It is meant to inform the recipient that they have allegedly infringed a legal right of the sender. At the very least, it asks them to stop, or cease, their actions or face potential legal action. These letters are particularly common in trademark disputes, where the sender will usually claim legal rights to a trademarked word, phrase or design and request that the recipient immediately stop using it on any commercial merchandise. However, cease and desist letters can be used for any type of alleged intellectual property right infringement, such as infringement of patents, copyright or industrial designs.

You may be wondering, is a cease and desist letter enforceable? 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 to obtain a cease and desist order from the court called an injunction. 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. What does cease and desist mean? It means to stop doing something and not resume doing it in future.

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. This is even more likely when the lawyer is licensed to practice in the jurisdiction of the intellectual property right alleged to be infringed and is a regular litigator of intellectual property disputes.

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 be 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.

Lawyers preparing cease and desist correspondence are subject to the profession’s Rules of Professional Conduct applicable to them in their jurisdiction, and in certain circumstances, a lawyer may be subject to discipline for the form or content of a communication if it is offside those rules. Following recent amendments to the Patent Act, cease and desist letters relating to patents will also be regulated by that Act and will need to comply with a set of requirements (which are still to be drafted as of the time of writing this article). Cease and desist letters regarding a patented invention received by someone in Canada will need to comply with the requirements. If the requirements are not satisfied, the recipient may commence legal action and obtain any one of several remedies, including a monetary award.

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"--which indicates it has not been issued by a court), then it is likely not cease and desist correspondence either. It may be that legal proceedings have already been commenced against you, in which case prompt action is advisable. 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 it is that 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. Strong language and assertions regarding the strength of your case, whether the letter is prepared by the intellectual property rights holder themselves or an attorney, are not necessarily accurate reflections of your legal position. 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 and the likelihood that the sender would succeed in such action. A lawyer can also help you decide the best course of action and, if necessary, help prepare a response. If you would like to speak with us regarding a cease and desist letter, contact us for a complimentary and confidential 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.

How to respond to a cease and desist letter / Evaluating your options

As the recipient of a cease and desist letter, you have options. Receipt of a cease and desist letter whether threatening legal action or perhaps requesting payment of a sum of money for settlement of the dispute, does not mean you are bound to choose among the options presented therein. It is possible the sender’s legal position is weak, there may be room for negotiation and settlement, and you may even have concurrent rights in the intellectual property you are alleged to have infringed. For these reasons, the advice of an experienced intellectual property professional is extremely valuable when considering a course of action in response to such a letter.

1. 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.

2. 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. While it’s possible the sender has no intention of engaging in a protracted and expensive legal battle, it is also possible they are well-prepared to invest in the protection of their intellectual property. If the cease and desist letter was prepared by a lawyer, the rightsholder has already invested in the protection of its assets. For information on litigation in intellectual property matters, see our intellectual property litigation frequently asked questions.

   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.

3. After evaluating the letter and its legal and business implications, you may find neither of complying with all demands that have been set out nor ignoring 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.

Resolving your case outside of litigation

Early case resolution—preferably, resolution before the sender initiates legal proceedings—has four principal advantages over litigation. First, and most obviously, it provides for much faster resolution than litigation, which is often protracted over several years. Second, it avoids most of the costs of litigation. Third, it provides certainty and control over the outcome of the case. Outcomes in litigation, conversely, are unpredictable; no matter how confident you are in your position, you can never be certain about how a court will decide your case. Fourth, it offers a degree of privacy that does not exist in public courts. Settlement negotiations are not a matter of public record, and the final settlement documents may include a confidentiality clause.

Negotiating a settlement is more an art than a science, and no strategy works best in all situations. However, parties that understand their needs and objectives, distinguish between what is within and outside of their control, and anticipate the sender’s strategies tend to fare best.

Retaining an experienced intellectual property litigation lawyer will increase your chances of achieving a favourable settlement. An IP litigator knows the substantive law that will apply in the event the matter is litigated, knows how to persuasively present facts, and can assess the strengths and weaknesses of each party’s position.

For your lawyer, the settlement process begins with gathering information. You can help with this by providing your lawyer with any documents or information you have in connection with the matter. Your lawyer may also ask you to provide business records and may ask you questions about your needs and objectives, your history with the sender, and your desired outcome.

Settlement negotiations, once commenced, are conducted on a “without prejudice” basis. This term refers to the legal privilege attached to communications that are specifically used for the purpose of negotiating settlement. It restricts any such communications from later being relied upon in court proceedings, should they arise—in other words, “without prejudice” communications are inadmissible as evidence in these proceedings.

Once an agreement is reached, it is advisable to have a detailed settlement agreement prepared, which should be signed by all parties. A settlement agreement is a contract, so it must meet the terms necessary for a contract, including mutual agreement and consideration (i.e., something given by both parties).

Settlement agreements typically include the following sections:

1. Names of the parties to the agreement;
2. Recitals, which appear at the start of the agreement and provide background of the settlement and underlying dispute;
3. A “promise to pay” provision, which states the settlement amount that one party agrees to pay to the other party, along with a payment schedule;
4. A “no admission of liability” provision, which states that you, as the accused party, do not admit to liability;
5. A “mutual release” provision, which states that both parties agree not to make any claims against the other party in respect of the past activities at issue; and
6. A confidentiality provision, which prohibits the parties from disclosing details of the case.

In order to avoid inadvertently falling short of the requirements of the settlement agreement, it is important to carefully review the agreement with your lawyer and to understand its day-to-day operation.

Conclusion

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 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 patent 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 trademark lawyer or trademark agent 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 a trademark cease and desist letter. 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 and the risk of receiving a copyright cease and desist letter.

If you would like to discuss any of these options with us or need help with a cease and desist letter, contact us now for a complimentary and confidential initial telephone appointment.