I’ve Received a Cease and Desist Letter, What Should I Do?
Firstly, if you have received a cease and desist letter do not ignore it and do not panic. Consult with a trade mark attorney or trade mark lawyer who can advise you whether the letter has merit and/or if you must comply with the letter.
Do Not Panic!
We know it can be quite frightening to be on the receiving end of a letter of demand. Often people will go into a bit of a panic and reply to a cease and desist letter straight away and do so without a without prejudice heading and make all sorts of concessions that they potentially shouldn’t be making. We have seen this many times, sometimes resulting in businesses openly telling the sender of the cease & desist that they will stop using the particular name/brand in question.
However, we have also seen many occasions where the recipient did not actually need to make these concessions let alone agree to rebrand. It might be a completely baseless claim that’s been made.
It is really important to seek advice first, however scary the letter might look. Imagine agreeing to completely rebrand your business only to find out down the track you never needed to! The merits of a cease and desist letter aren’t determined by how intimidating the demands are, or even by the name of the firm appearing on the letterhead, however expensive the firm might be. The merits are determined by the specific facts and circumstances of the case and relevant laws. These circumstances will vary on a case by case basis.
Once example of a claim that does not have merit is that you’ve received a cease and desist letter from a third party that has a pending trade mark application and perhaps they’re claiming that you’ve engaged in infringement, which isn’t possible if they have a pending application and not a registration.
It is not uncommon, particularly for self-filers, to assume that once an application is filed they have the right to claim another party is infringing. In this situation you might actually have grounds to challenge the trade mark application, and may even have the right to take steps against that person for making any groundless threats of legal action relating to trade mark infringement. If you did wish to challenge a person’s pending application you would need to do so within a finite period, there’s only a two months opposition window in which a pending trade mark application that’s been accepted and advertised can be opposed.
Do Not Ignore the Letter
It’s also important to seek advice promptly because your rights and your potential liability exposure could be altered either as you delay responding to a cease and desist letter, or if you attempt to respond on your own path. This is particularly important where the claim does have some merit.
For example, say that you’ve been advertising a product that is due for eminent launch and unbeknownst to you, unfortunately, the brand you’ve chosen actually infringes a third party’s trade mark. If you were to receive a cease and desist letter in advance of your launch, you might need to take steps quickly to cancel that launch. Doing so could avoid damages or maybe even an injunction. In that scenario it would be really important to take steps quickly and of course you want to seek advice before you do so because the costs involved in cancelling a launch of a product, unless it actually is necessary, would be significant. A person’s conduct on learning of an alleged infringement is considered in the event the matter went further, hence, acting promptly and in good faith is advisable.
Common Issues We See With Cease & Desist Letters
Most commonly is perhaps that ‘panic’ that sets in when receiving an aggressive letter, or any allegation of wrongdoing is issued. Perhaps more so start up or smaller business there is a fear of having done something wrong, and the fear of not knowing where to get advice or even perhaps fear that the advice is unaffordable. It doesn’t have to be.
Consider the cost of rebranding if you don’t actually need to. Even if not in a position to engage an attorney to respond to a letter on your behalf, an hour advisory call could set you in the right direction to respond yourself. That cost would be significantly less than rebranding if there’s no reason to be rebranding. That cost may also be less than the liability of sending inappropriate communication that could be used against you.
We’ve had clients come to us after attempting to resolve a dispute without seeking advice and we’ll see the to and fro between the parties and it can be a difficult to assist, because sometimes the client will have agreed to do things that they should not have agreed to do because there was never any basis for the demand in first place. Sometimes what we unfortunately see is people denying liability when there is liability and doing that in an open letter, or saying things that are inflammatory, and doing that in an open letter, which if it would ever go to court, then that can be disclosed in court and it doesn’t look good.
Trade mark infringement is a complex area, rarely black and white. In some cases it’s clear that there is zero merit to the claims in a cease and desist letters; sometimes it’s clear there is infringement but then there are times where it’s a little more ‘grey area’.
There are also cease and desist letters issued where it’s not necessarily a case where there’s no liability and the demands are completely meritless, but what you often see is that the demands have some merit, but they’re a bit over the top. Businesses can do themselves a disservice by not seeking advice, because they may be agreeing to take on more responsibilities and obligations than they should. And it’s hard to backtrack from that; sometimes it may even be impossible.
We have seen other situations where people respond to these letters, denying any wrongdoing or liability but actually then make it clear that they are liable because of how they respond and what they say. This can be another situation that is difficult to ‘fix’ after that communication is sent.
Another common situation we see is where the parties are corresponding in an antagonistic fashion. That really limits the ability of advisers to come on board at a later point in time to try to negotiate a balanced and fair commercial settlement. If the parties have become irate with one another, because of how they’ve handled it prior to engaging counsel, it can be really difficult to get them on board with what would have otherwise been a very sensible commercial resolution. And we’re seeing this unfortunately lead to very protracted disputes that should have been settled quickly.
Who Can Send a Cease & Desist Letter? Where Do They Come From?
Usually cease and desist letters are sent either by trade mark attorneys or lawyers. Typically, a letter from a trade marks attorney or IP Lawyer will not contain completely groundless claims, as these practitioners understand what information must be presented to support those claims. They may at times include demands that are particularly aggressive and onerous so even if there is merit to the claim, often the demands can be negotiated.
However, sometimes we do see cease and desist communications coming from individuals like the businesses themselves. And those are the letters that are more likely to be baseless or perhaps overstate their rights, or as is more often the case, simply not contain enough information to assess the merits of the complaint. That can land the sender in trouble because there are legal provisions at least in Australia, which basically provide that if you’re making a threat of a litigation for trade mark infringement, it has to be supported. If it’s actually baseless, if it’s unjustified, there’s a course of action where the recipient can literally take you to court for having made an unjustified threat.
So, in conclusion, don’t panic but don’t delay in seeking advice if you receive a letter of demand. Often when we are approached with questions on a letter that has been received the enquirer has been ‘sitting’ on the letter. Rather than contact a trade marks attorney the day of receiving the letter the contact comes very close to the stipulated deadline to respond. This is not necessarily helpful to the alleged infringer. Delaying advice until the 11th hour ultimately means your attorney or lawyer is unlikely to be able to prepare a proper response and send by that deadline, so, you can find yourself on the wrong foot with the other side by not responding by the time they’ve requested. We find, particularly in cases where there is merit to the claims, responding promptly and treating the other side’s complaints seriously and respectfully will go along way to reaching a settlement through negotiation and avoiding legal proceedings.
It is also important to seek advice before sending a cease and desist letter to ensure you are meeting your responsibilities as to the information to include in the letter but importantly to ensure you are not sending a groundless claim.
