What to do when confronted with a "Cease and Desist" Letter
Cease & Desist Letters - Ian Cockburn, Patent Attorney
Cease & Desist Letters – What are they and what to do about them?
It is not uncommon for small businesses or start-up companies, especially if they are successful, to receive letters accusing them of infringing the rights of another. The infringement may be of a product or process of a protected Patent, Design, Copyright, or even the use of a confusingly similar name of a Registered Trademark. More often than not the recipient is not even aware that such protection exists and that the products they are making, the drawings they are using to make those products, or even the name that they are selling those products under is protected by one or more Intellectual Property rights (IPR).
Such letters, often called “cease and desist” letters, usually inform the company of the existence of a granted Patent, Design, a copyright or a Registered Design by its number, assert ownership to the Intellectual Property and set conditions that are to be met and a deadline for meeting those conditions.
The letter will invariably indicate that the products you are making, selling or importing, or the process that you are using is a restricted one. And that if you do not stop selling or producing the offending items the matter will end up in court.
Cease & Desist letters are issued for two main reasons.
Firstly, a cease & desist letter can be generated by competitors who feel genuinely aggrieved that their hard won innovations, protected by Patents, Designs, Copyright are being infringed – or so it seems to them. Secondly, a cease & desist demand will often result from companies who wish to take advantage of recent IP purchases in the hope of gaining royalties or licenses to lucrative technologies or to technologies on which other companies depend. While Intellectual Property systems are designed to encourage technology transfer there are some companies that actively look at, and purchase issued patents as a means to secure out of court settlements or licenses.
In any event, a cease & desist letter should never be ignored - and can often lead to the transfer through licensing of state of the art technology that provides both licensee and licensor with technical advantages over competitors and which can secure and ensure present market position and future market growth. The matter of sub-licenses is also a real and potential lucrative proposition. So, looking at it positively, a cease & desist letter may not be the end - it may in all truth be the beginning.
What should you do if you receive a “Cease and Desist” letter?
The first thing that should happen on receipt of such a letter is to take the letter seriously.
Obviously, such a letter is more than just an inconvenience. It is a downright nuisance and an initial reaction might simply be to ignore the matter it in the hope that it will go away. Do not do this. In most countries there are laws that protect manufacturers from receiving such letters without good reason. So there is a good chance that there is a certain amount of credibility to the Claim that you are infringing. Whether or not you are is an entirely different matter and one which will ultimately be determined by the courts or similar legal body. But it rarely gets to that stage if the matter is addressed early.
The next thing to do is to stand back and take a rational look at the Claim being made and evaluate that, if the Claim is valid one, what affect it will have on your business and just as importantly on your Clients. Following on from this, it is essential that to make a considered response to the sender. Such a response will almost invariably involve the services of an Patent Attorney where the attorney will evaluate the Claims made in the letter, comparing the alleged infringing act with what is actually protected by the particular IP concerned – be it a Patent, design or the copyright; or even a Trade Secret.
It is also advisable to obtain a written opinion from your patent attorney as a sign that you have acted in good faith should the matter proceed to the courts at a later date. The written opinion might also suggest should you in fact be an infringer what options are open to you. These sorts of options may include designing around the protected article or process, licensing possibilities, and might even suggest some sort of manufacturing and distribution agreement with the complaining party. At the very least, the opinion will enable you to understand the process involved and the similarities (and differences) between your products and those of your competitor.
The author of this article Ian Cockburn Patent Attorney & Marketing Manager for PIPERS, Patent Attorneys, who can be contacted at firstname.lastname@example.org