It’s every inventor’s worst nightmare. You open the mailbox and find an envelope with the name of an official-sounding law firm. Written boldly across the top of the letter: “NOTICE OF DEMAND TO CEASE AND DESIST.” Those seven words (and any other variation on them) can spell disaster for anyone involved in creative work. Whether you’re developing a new invention, writing a blog, or managing a Fortune 500 software company, legal action from your competitors is always a possibility.
When you receive a letter like this, it can be catastrophic, even if the sender’s claim is invalid. Any legal document that you encounter needs a thorough evaluation. You should make a plan for how to respond or not respond. Because of the need for companies and individuals to spend money and time evaluating the threat presented, cease and desist letters are an easy tool for mounting tactical legal action against a competitor.
This type of legal strategy is an inevitability in today’s business world. It pays to be knowledgeable about cease and desist letters and what they can and cannot do. You may even want to know how to use them yourself to defend your position in the market. Read on if you’re ready to learn more about cease and desist letters, tactical lawsuits, and how you can protect your new business venture.
Understanding intellectual property lawsuits
Before we can answer the question of what are cease and desist letters in the context of your career as an inventor, it will be helpful to understand intellectual property (IP) rights. There are many legal issues surrounding everyone’s rights.
What is Intellectual Property?
Merriam-Webster defines IP as “property (such as an idea, invention, or process) that derives from the work of the mind or intellect.” This definition pretty much sums it up: IP is your ideas, the processes you develop to implement them, and the details of the resulting product.
We also have a great article here on Invention Therapy describing Intellectual Property laws in detail.
History of Intellectual Property Law
The concept of intellectual property has been around in some form starting with the ancient Greece. The modern legal definitions of IP, though, began to take shape sometime in the 19th and 20th centuries as the industrial age brought on a need to establish better protections for innovative individuals and companies. In the late 20th and early 21st centuries, IP law has become a ubiquitous feature of the business landscape, especially in the tech and software development circles.
Intellectual Property in the Information Age
These days, IP is everything. With improved access to global manufacturing, instant communication via the internet, and the near-disappearance of company loyalty, it is easier than ever for ideas to migrate from place to place. One company might spend millions on developing an idea only for its chief engineer to defect to their competitor and implement the idea for them. In order to protect against this potential loss, an entire sub-industry has formed specifically on the nuances of intellectual property law.
IP law is an idealized form is a benevolent structure designed to protect those who innovate. Copyrights trademarks, and patents, to name a few, are some of the mechanisms of the IP law world that offer support and protection for original thought in the commercial world. However, IP law, like with any invention, is a tool that has no intrinsic moral value. It’s up to the user to decide how to implement this tool, and for what purposes.
Today, many tech firms spend a great deal of money and time searching out potential infringements on their IP (patents, especially). Most businesses try to maintain their position in the market and prevent other companies from stealing their ideas. Some others, though, use the IP law system to deliberately undermine their competitors’ ability to operate by forcing them to engage in IP lawsuits. The principal tool in any IP dispute, whether defensive or otherwise, is the cease and desist letter.
What are and cease desist letters?
In its most basic form, a cease and desist letter is a request that you stop doing something you’re doing. It also prevents you from doing it again later. The letter typically will be sent by a lawyer on behalf of their client. It will be sent to an individual or company that the client believes is engaging in activity that somehow causes damage, or poses a threat.
What are cease and desist letters used for?
Intellectual property rights are only one of many different areas in which cease and desist letters care important. Other uses include:
- Breach of non-compete contracts
- Trademark Infringement
- Copyright Infringement
- Privacy Considerations
Whatever the details may be, the stated goal is always the same: to cause you to stop doing what was stated in the letter. Of course, there is always the implication, or even openly stated threat, that matters will get worse for you if you do not stop. The whole point behind sending the letter is to threaten legal action.
As previously mentioned, the claim made in a cease and desist letter doesn’t necessarily have to be true. In many cases, a company or individual will use this type of letter to intimidate someone by implying harsh legal actions. Sometimes just the threat of a lawsuit is enough to scare someone into complying with the request. In the case of entrepreneurial ventures and startups, cease and desist letters are often used as tactical weapons against rival companies. If you receive a cease and desist letter, make sure you seek professional legal advice before responding.
Official orders to cease and desist
In some instances, you may receive a cease and desist letter from an official entity, for example, a government agency. In these cases, the document will often be an “order to cease and desist.” That language makes things sound a bit more serious, and for a good reason. According to legaldictionary.net, an official order to cease and desist “is an injunction against an individual or entity requiring them to halt the activity mentioned in the order until a court can decide if they may legally proceed.”
A cease and desist letter is a formal request to halt activity. It is sent from one private party to another and often includes a threat that the sender might sue if their concerns are not addressed. Official orders to cease and desist, however, carry extra weight because a court of law issues them. Failure to comply could result in legal action, including arrest and jail time. Court orders to cease and desist are granted in cases where the action in question may cause irreparable damage to an individual or the community if the action continues.
What to do when you receive a cease and desist letter
When you receive a cease and desist letter, you might find your heart rate rising a bit. The wording is often very official-sounding and laced with incomprehensible legalese designed to intimidate you. But if you recall the difference between a cease and desist letter and an official order to cease and desist, you’ll quickly realize that there’s no reason to panic. A letter, on its own, carries no real legal power, so you have some flexibility in how you choose to respond. The first thing you should do when you receive a cease and desist letter is to hand it to your lawyer and ask for advice.
What are cease and desist letters able to do?
The short answer is nothing. A letter, no matter how formal, has no power in itself unless a court issues it. It is important to talk to an attorney and make sure you know whether you’re dealing with a cease and desist letter or official order. Once you’re sure it’s only a letter, you can relax a bit and take the necessary time to work with your lawyer to formulate an appropriate response.
One thing to keep in mind as you plan your response is that cease and desist letters are often the first step in legal proceedings. Any interaction you have with the sender is possible evidence in court should your dispute go to litigation. So think twice before sending a nasty response.
How and when to send your own cease and desist letter
If you believe that a company or individual is stealing your IP, or infringing on your rights, you might want to send your own cease and desist letter. A letter might be a good idea, and it might not. There are some important things to consider and discuss with your lawyer before sending a formal letter.
Whenever you take formal action against another party, it opens you up to possible negative consequences, including retaliatory legal action. Not the least of these is the potential of retaliation. According to law firm LRRC, a party accused of copyright infringement may respond to a cease and desist letter by requesting a court to take action. This action would then require you, the accuser, to respond to the allegation that your accusation was false. It’s easy to see how this could lead to a perpetual game of legal ping-pong in which no one comes out on top. If they have a bigger and better legal team than you do, your chances of winning this kind of contest are slim, even if you know you’re in the right.
Investigations into your activity
If you accuse someone of shady dealings, you’d better be prepared for them to point out the skeletons in your closet. Everyone in business has trade secrets, IP, etc., that they’d rather not share with the world. When you go to court, much of this becomes fair game for your opponent to question and can be exposed during formal legal proceedings. If you’re concerned in any way about light being shed on your activities, going to court is going to make you feel very uncomfortable. For this reason, many corporate disputes settle out of court.
There are times when sending a cease and desist letter is the right course of action. You need to talk to your lawyer to decide what’s right for your particular situation.
Should you do decide to take action against someone, it’s almost always a good idea to send an informal request first. In some cases, the offending party may not even realize that they’re using your IP improperly, and you can settle the matter without conflict. In others, an IP dispute may even turn into an opportunity to gain a new customer or form a valuable partnership.
Often, a cease and desist letter serves as the first step in licensing negotiations. The sender might word the letter as a proposal to enter a partnership, rather than a threat of legal action. If both parties agree that there is potential for collaboration, then the initial letter might serve as the jumping-off point for negotiating a valuable licensing contract.
Now that you know how cease and desist letters work, you should be relieved. Once you see where these fit into the bigger picture of intellectual property law, you will feel less panic if you receive one. You should always take any cease and desist letter seriously. Be careful to avoid infringing on others’ IP, but there’s no need to live in fear of the cease and desist letter. Many entrepreneurs interpretation of these letters as a sign that they’re on the right track and have an idea that others see as a potential threat.
Just remember to always talk to your lawyer before responding to a cease and desist letter or making any legal decision.
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