3 Key Steps to Protecting Your Business When You’ve Received a Cease and Desist LetterTaylor Johnson
Getting blindsided by a cease and desist letter chalk full of technical legal jargon is an extremely intimidating experience for small business owners. Oftentimes, a C&D letter involves a claim that your business has infringed on the sender’s trademark or copyright. For most business owners, being threatened to halt a business action or face litigation can invoke feelings of rage and panic.
If you’ve been fortunate enough to have never received one, a cease and desist is a letter that claims that an individual or business is engaging in an unlawful act that interferes with the sender’s ability to do business. A C&D requests that the recipient immediately stop said act or face legal action.
When you consider that a lawsuit can absolutely cripple a small business, it’s easy to understand why many owners give in to the temptation of reacting to the letter with an emotional response. While emotion certainly has its place in business, it does not belong in your reaction to a cease and desist.
Remember that a cease and desist letter is not legally binding and is only the legal opinion of an attorney. So if you or your business receives a C&D, instead of panicking take a deep breath and follow the 3 steps bellow:
Step 1. Read through and Discuss the Merit of the Claims with an Attorney
The first thing you should do after receiving a C&D is sit down in a quiet room and read through the letter a few times. As you read, ask yourself these questions:
- What is the sender accusing me of? (Trademark Infringement? Breaking a Contract? Copyright Infringement?)
- Are you in fact using engaging in the action you are being accused of?
- Are you familiar with the sender?
- How long do you have to comply with the sender’s request?
- If I complied with the letter’s request, how would it affect my business?
Once you’ve answered these questions, seek out a lawyer that specializes in litigating the type of infringement you are being accused of. DO NOT, repeat, DO NOT try to respond to the C&D without first discussing it with a lawyer. A lawyer’s response is typically inadmissible in court, but if you respond on your own it could end up coming back to bite you in the butt.
Depending on the type of infringement, specific legal actions might be necessary in order to protect yourself. A lawyer experienced with cease and desist cases can help guide you through the legal jargon and judge whether or not the letter has any legal merit.
Attorneys are able to decipher the sender’s legal claims based on the letter’s legal citations and discover if the assertions hold any weight. If you don’t already have a lawyer on retainer, consider contacting your local Bar association. The American Bar Association provides an interactive state-by-state directory through which you can quickly find the contact details for your community’s lawyer-referral program.
Step 2. Collect Evidence
Once you have gone over the C&D with your attorney, it’s time to start gathering any documents related to the sender’s claims and compile them into your own legal file. If the claim is about a trademark or copyright, then collect all information regarding your use of this property. Is it on your website? Your marketing materials? Product labels? Record every instance in which you use the trademark or copyright. Not only will you likely need this information in court, but also laying exactly how you use a trademark will allow you to assess just how much of an impact the C&D could have on your business.
Within your file, keep a record of every time you have communicated with the sender, including letters, emails, phone calls, and personal interactions. Moreover, begin conducting research on the sender to get a better idea of what you are up against. Learn about how and where the sender uses the trademark.
Step 3. Prepare a Response
Now that you have your evidence, you can decide with your lawyer how to best respond to the C&D. Below are several of your likely options:
Response #1: Deny the Claims – You could respond with a lengthy counterargument that declares that the sender’s claims are frivolous.
Response #2: Comply – It may be the case that the trademark or copyright is no longer of value to you or that the sender’s request can be easily met with little or no harm to your business. In these situations, it could save a lot of time and hassle by just complying with the request.
Response #3: Negotiate – You could request to negotiate a deal that provides you with license to use the sender’s property.
Response 4: Sue – If you and your lawyer are comfortable with escalating the situation, you may decide to file a Declaratory Judgment Action. A declaratory judgment is a court ruling that declares whether the sender’s accusations are true.
Keep in mind that this is not an exhaustive list. Depending on your situation you may have more options available to you. Again, no matter which response you decide to go with, make sure you discuss it in detail with your lawyer.
In sum, if you are unfortunate enough to receive a cease and desist letter, the most important thing to remember is to remain calm and avoid an emotional response. Instead, tackle this issue pragmatically and follow the three steps above.