The Art Of Crafting Cease & Desist Letters

You open your inbox and find a letter demanding that you immediately stop using a business name, photograph, design, song, software, confidential information or other intellectual property. The letter alleges that you have infringed another party's rights, requires certain action by a specific deadline and threatens legal proceedings if you fail to comply. What should you do?

Alternatively, you may be the business or rights holder on the other side. You discover that another party is using your trademark, copyrighted material or other intellectual property without authorization. Perhaps the conduct is causing marketplace confusion, interfering with your business relationships or damaging the goodwill associated with your brand. Should you send a cease and desist letter? And, if you do, what should it say?

A well-crafted cease and desist letter is more than a demand to “stop.” It can be an important strategic tool for protecting legal rights, communicating the seriousness of a dispute and, where possible, resolving a matter before litigation becomes necessary.

However, cease and desist letters should be approached carefully. The appropriate strategy depends on the rights at issue, the strength of the legal position, the evidence available, the relationship between the parties and the client's broader business objectives.

What Is A Cease & Desist Letter?

A cease and desist letter is a formal written demand requesting that another party stop specified conduct that the sender alleges violates its legal rights.

Cease and desist letters commonly arise in disputes involving:

• trademark infringement;

• passing off;

• copyright infringement;

• unauthorized use of photographs, artwork, music or other content;

• counterfeit goods;

• confidential information and trade secrets;

• contractual breaches;

• domain names and online content;

• false or misleading representations;

• misuse of a business's name, brand or other intellectual property; and

• other commercial disputes.

A cease and desist letter is generally not itself a court order. Receiving one does not mean that a court has determined that infringement or other unlawful conduct has occurred.

Rather, the letter communicates the sender's position and demands particular action.

Similarly, sending a cease and desist letter does not establish that the sender's allegations are legally correct. The existence, ownership, scope, validity and enforceability of the rights being asserted may all require legal analysis.

Receiving A Cease & Desist Letter

Receiving a cease and desist letter can be intimidating, particularly where it comes from a large corporation, established brand or law firm. However, a recipient should avoid reacting impulsively.

A demand letter may contain allegations rather than established facts. The sender may have a strong claim, a weak claim, or a claim that requires significantly more factual and legal analysis.

Before responding, it is important to understand:

• who is asserting the rights;

• what rights are allegedly owned;

• whether those rights are registered or unregistered;

• what conduct is alleged to be unlawful;

• when the alleged conduct occurred;

• what evidence supports the allegations;

• what remedies are being demanded;

• what deadline has been imposed; and

• what consequences are threatened if the demands are not satisfied.

The recipient should also consider preserving potentially relevant documents and information and avoiding unnecessary communications about the dispute until legal advice has been obtained.

Should You Respond?

A cease and desist letter should not simply be dismissed because the recipient disagrees with the allegations. At the same time, not every demand requires the same type of response.

Depending on the circumstances, counsel may recommend:

• providing a substantive response;

• requesting additional information or evidence;

• denying some or all of the allegations;

• identifying deficiencies in the asserted rights;

• seeking an extension of time to investigate;

• proposing modifications to the disputed conduct;

• negotiating a licence, coexistence agreement or other commercial resolution;

• providing appropriate undertakings;

• engaging in settlement discussions; or

• taking another strategic approach.

The appropriate response will depend on the particular facts and legal issues.

Recipients should also be cautious about making admissions, destroying or altering potentially relevant evidence, agreeing to undertakings they do not fully understand, or making payments simply because a demand has been made.

Where litigation is threatened or reasonably anticipated, obtaining legal advice promptly can be particularly important.

The Rights Holder's Perspective

From the rights holder's perspective, discovering unauthorized use of intellectual property can raise serious concerns.

A business may have invested significant time and resources developing its name, reputation, creative works, proprietary information and goodwill. Unauthorized third-party activity may potentially cause consumer confusion, interfere with commercial relationships, diminish brand value or otherwise affect the business.

Depending on the circumstances, the dispute may involve rights arising under the federal Trademarks Act, Copyright Act, contractual arrangements, the common law or other applicable legislation.

For example, Canada's Trademarks Act addresses certain conduct involving trademark infringement, depreciation of goodwill and passing off. Where a contravention is established, available remedies can include injunctions, damages or profits and, in appropriate circumstances, orders concerning offending goods and materials.

Copyright owners may similarly have access to remedies including injunctions, damages, an accounting of profits and delivery up where infringement is established.

However, the existence and availability of a particular remedy will depend on the applicable legislation, the facts and the evidence.

For that reason, rights holders should assess the legal foundation for their allegations before making significant demands of another party.

Is A Cease & Desist Letter Always The First Step?

Not necessarily. A cease and desist letter is a common pre-litigation enforcement tool, but it is not mandatory or appropriate in every dispute.

In some circumstances, an informal communication may be sufficient. In others, the parties may benefit from negotiations or another dispute-resolution process.

There may also be situations involving urgency, preservation of evidence, ongoing counterfeiting or other circumstances where advance warning could affect the client's legal strategy. In those cases, counsel may consider whether other remedies or proceedings should be pursued.

The enforcement strategy should therefore be determined by the circumstances rather than automatically beginning with the same form of demand letter in every case.

Understanding The Client's Business Objectives

An effective cease and desist strategy begins with understanding what the client actually wants to accomplish.

Stopping the disputed conduct may be the primary objective, but it is not always the only one. A client may also want to:

• protect the exclusivity of its brand;

• prevent consumer confusion;

• preserve an important commercial relationship;

• obtain compensation;

• recover or prevent disclosure of confidential information;

• obtain information concerning the extent of allegedly infringing activity;

• remove particular products or content from the marketplace;

• negotiate a licence or other commercial arrangement;

• preserve evidence;

• protect its reputation; or

• resolve the dispute without litigation.

The tone and substance of the correspondence should reflect those objectives.

A demand sent to a long-standing licensee who may have inadvertently exceeded the scope of a licence may appropriately look very different from correspondence directed at a party allegedly manufacturing and selling counterfeit goods.

The Art Of Drafting The Letter

There is no universal cease and desist template suitable for every dispute.

Effective demand letters require a balance between being firm enough to protect the client's position and measured enough to advance the client's objectives.

Depending on the circumstances, a well-drafted letter may:

• identify the client and the rights being asserted;

• explain the factual and legal basis for the client's position;

• identify the allegedly unlawful conduct with sufficient specificity;

• describe the client's concerns;

• demand that specified conduct cease;

• request preservation of relevant records or evidence;

• request information or an accounting where legally and strategically appropriate;

• seek removal, delivery up or disposition of allegedly infringing materials where an appropriate legal basis exists;

• request appropriate undertakings;

• identify a reasonable deadline for compliance or response;

• reserve the client's rights and remedies; and

• identify potential next steps if the dispute cannot be resolved.

The demands made should have an appropriate factual and legal foundation.

An overly aggressive letter containing exaggerated allegations or unsupported demands may undermine the sender's credibility and make an otherwise resolvable dispute more difficult.

Conversely, correspondence that is too vague may fail to communicate the seriousness of the issue or adequately protect the client's interests.

Assume The Letter May Be Seen Again

Lawyers and clients should draft cease and desist correspondence with the understanding that it may later be scrutinized outside the immediate negotiation.

Depending on the circumstances, correspondence may become relevant in subsequent litigation or be shared more broadly by the recipient.

For that reason, demand letters should generally remain professional, accurate and proportionate. Allegations should be supported by the available facts and law, and unnecessary inflammatory language should be avoided.

A strong demand letter does not need to be hostile. Often, the most effective correspondence is the letter that demonstrates that the sender understands its rights, has carefully assessed the facts and is prepared to take proportionate further action if necessary.

When The Parties Have An Existing Business Relationship

Enforcement becomes particularly nuanced when the parties already have a commercial relationship.

For example, the recipient may be a licensee, distributor, contractor, former employee, collaborator or other business partner. In those circumstances, the issue may involve both intellectual property rights and contractual obligations. The client may want to stop particular conduct without unnecessarily destroying a valuable commercial relationship. Rather than immediately escalating the dispute, counsel may determine that the appropriate approach is to identify the contractual or legal concern, remind the other party of its obligations and provide an opportunity to remedy the issue.

This is another reason why cease and desist letters should be tailored rather than generated from a standard form.

What If The Sender's Claim Is Weak?

Receiving a formal legal demand does not mean the sender necessarily has superior rights.

In an intellectual property dispute, the recipient may have prior rights, an existing licence or consent, a statutory defence or exception, or other facts that materially affect the claim.

Trademark disputes, for example, can involve questions concerning registration, prior use, distinctiveness, confusion, scope of protection, geographic considerations and the particular goods or services involved.

Copyright disputes can raise separate questions concerning ownership, subsistence, originality, authorization, licensing, exceptions and whether a substantial part of a protected work has actually been reproduced.

The allegations should therefore be independently assessed rather than accepted simply because they appear on a law firm's letterhead.

When Stronger Enforcement May Be Appropriate

There are circumstances where stronger enforcement measures may be warranted.

Where the evidence indicates deliberate or ongoing infringement, counterfeiting, continued misuse after notice or other serious conduct, a rights holder may consider seeking more extensive relief.

Depending on the legal basis for the claim and the circumstances, this may include demands concerning:

• immediate cessation of specified conduct;

• removal of infringing content or listings;

• discontinuation of the manufacture, advertising, distribution or sale of disputed goods;

• preservation of documents and records;

• information regarding the scope of the activity;

• an accounting;

• delivery up, destruction or other disposition of infringing materials;

• monetary compensation;

• written undertakings; and

• other appropriate relief.

Importantly, the fact that a party demands a particular remedy does not mean that it is automatically legally entitled to receive it. The availability of remedies ultimately depends on the underlying rights, applicable law and circumstances.

What Happens If A Cease & Desist Letter Is Ignored?

If the recipient does not respond or refuses to comply, the sender must decide what to do next.

Depending on the dispute, options may include further correspondence, negotiations, mediation, commencing court proceedings or pursuing other available legal or administrative remedies.

A cease and desist letter itself does not compel compliance in the same manner as a court order.

If proceedings are ultimately commenced, the court will determine the parties' respective legal rights and what remedies, if any, should be granted.

For that reason, both sending and responding to cease and desist correspondence should be approached strategically and with an understanding of what may follow.

Conclusion

There is an art to crafting and responding to a cease and desist letter.

The strongest approach is not necessarily the most aggressive one. Effective enforcement requires an understanding of the client's legal rights, evidence, commercial objectives, relationships and tolerance for litigation.

Similarly, recipients should not assume that every allegation or demand is legally justified merely because it appears in formal correspondence.

Each dispute requires an individualized assessment of the facts, the applicable law and the client's objectives.

Ranieri Law assists businesses, entrepreneurs, artists and rights holders with intellectual property enforcement, cease and desist letters, responses to infringement allegations, commercial disputes and related litigation and dispute-resolution matters.

For more information about enforcing or defending your rights, contact Ranieri Law to schedule a complimentary initial consultation.

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