How to Respond to a Cease and Desist Letter

This is Part 1 of a two-part series on cease and desist letters. This Part discusses what to do if you receive a cease and desist letter. Part 2 discusses what to do if you need to send a cease and desist letter. Please note that the below is intended to help you understand the issues at play and compile information for your attorney.  Although there are many aspects of your business that you can handle alone, unless you know what you’re doing, responding to and sending cease and desist letters is very serious business for which you should consult an attorney.  As always, feel free to contact us with any questions.

For content creators, the words “cease and desist” are deadly.  After all, content creators make their living by creating content.  If they cease and desist from that activity, even momentarily, then they stop making money.  But unfortunately, cease and desist letters are serious business.  The below addresses some of the steps you might consider taking if one day you find a cease and desist letter waiting for you in your mailbox. (1) Review the facts discussed in the letter.  You are receiving a cease and desist letter because the other party believes that your work infringes upon theirs.  Usually a cease and desist letter from an attorney will provide some factual context for any such allegations.  Whether the allegations are based on copyright or trademark, the cease is desist letter is likely to include at a minimum such information as when the other party’s work was created or when it first used as a trademark.  If the cease and desist letter contains no such facts, then request them from the other party or their attorney.  Investigate the accuracy of every claim in the cease and desist letter, and begin compiling your own set of facts.  Now is also a good time to research the other party in an effort to  learn more about them and gauge their litigiousness. (2) Review the other party’s work.  The cease and desist letter will also usually contain a copy of, or a specific reference to, the other party’s work.  If not, and if you cannot locate an exact copy of the work online, then you should request a copy from the other party or their attorney.  Once you have a copy of the work in question, review it carefully.  Have you seen or heard that work before?  Do you own a copy of that work?  Is the work sufficiently creative enough to warrant copyright protection?  If trademark infringement is alleged, has the work in question been properly used as a trademark?  How similar is it to your work and what is similar about it? (3) Preserve information relating to the other party’s claims.  Once you have a grasp on the other party’s claims, be aware you cannot destroy any information relevant to those claims.  Courts take this matter very seriously.  If you have employees, you may want to instigate what’s called a “litigation hold” in an effort to preserve evidence.  Know that you don’t have to turn anything over to the other party at this point if you don’t want to, but you also can’t take your hard drive out to the driveway and smash it with a hammer. (4) Consider temporally pulling your products.  Based on your findings from Paragraphs 1 and 2, above, you may want to pull your products from the marketplace.  Damages in both copyright and trademark law are often at least partially based on your profits and the willfulness with which you may have violated another party’s intellectual property rights.  Immediately ceasing and desisting from further sales protects you from the further accumulation of damages in the event that you are liable.  But undertake or don’t undertake this step only after careful deliberation.  An attorney can help you decide whether this step is warranted. (5) Check to see if the other party’s work is registered.  If the copyright or trademark in the other party’s work was registered with the appropriate office, then the cease and desist letter will almost certainly mention that fact.  Registration drastically alters the case analysis, as it provides heightened damages and, potentially, certain presumptions that can be hard to overcome.  If the cease and desist letter references such registrations but does not include them, then request them from the other party or their attorney.  You can also conduct your own copyright search via www.copyright.gov, and your own trademark search via www.uspto.gov.  Once you have a copy of the registrations, review them to the best of your ability to see whether the registration corresponds to the work in question.  If the work is not registered, then certain heightened damages and other benefits won’t be available to the other party.  Additionally, in copyright law, the copyright in the work in question must be registered before suit can be brought.  So no registration may mean that the other party is more willing to engage in reasonable settlement discussions, particularly as their potential damages may be reduced. (6) Compile potential defenses.  After you’ve conducted your initial investigation, start compiling and analyzing available defenses.  In copyright law, some common defenses are that your use of the other party’s work was a fair use, that you created your work independently of the other party, that you had a license to create the work that you created, or that the other party’s work is not sufficiently original to qualify for copyright protection, to name a few.  Some common trademark defenses include that the trademark being asserted isn’t valid, that your use of the mark was a fair or prior to the other party’s use, or that the trademarks aren’t similar enough to confuse the general public, to name a few.  You will want to have a solid grasp on how these and other defenses work; merely alleging them probably won’t scare away the other party.  Fair use is a particularly murky concept and should not be relied on unless you have extensive experience with the subject or have consulted an attorney.  You may also have certain counterclaims against the other party.  Again, an attorney can help you decide what rights of yours may have been violated. (7) Check your exposure.  If after proceeding through the above steps, you believe that you may be found liable, even if wrongly or barely, for infringement, then assess what your potential damages might be.  In copyright law, if the other party’s work is registered, then you may be on the hook for statutory damages, and if your infringement was willful then you may be on the hook for up to $150,000 per act of infringement.  If the work is not registered, then you may only be liable for actual damages plus profits attributable to the infringement.  In trademark law, you may be on the hook for three times your profits, the other party’ damages, plus costs and attorney’s fees.  How much money you’re making from your work and what your damages might be will almost certainly affect how aggressively you defend yourself against allegations of infringement. (8) Determine how to proceed.  If you have not already, now would be another good time to consult with an attorney.  Presumably, by this stage you’ve done enough legwork to either make the decision as to how to proceed or empower your attorney to help you make that decision.  You basically have three options for handling the cease and desist letter.  You can (a) respond to the cease and desist letter; (b) ignore the letter and test the other party’s resolve (i.e., see how serious they are about protecting their rights by making them contact you again or take additional steps); or, if you’ve consulted with an attorney first or are an extremely sophisticated party who fully understands the risks involved, (c) file a declaratory judgment action to aggressively fight the issue in the jurisdiction of your choice.  Each course of actions has some benefits, and each some risk.  If you file a declaratory judgment action, then you may either scare off the other party or have walked into years-long litigation.  If you chose to ignore the other party, then they may go away or they may go ahead and file their claim, in which case you may have lost some leverage and walked into years-long litigation.  Although contacting the other party probably carries the lowest risk, and is usually the best way to proceed, be careful about what you admit to the other party or their attorney.  Usually, contacting the other party is the most sensible option, which is discussed in more detail below. (9) If you decide to respond, then decide how to respond.  If you decide to reach out to the other party or have your attorney do it for you, then you may want to do so early on, either to obtain more information as discussed above, or simply inform them that you take matters like this very seriously, and that you are currently investigating the issue and will get back to them the following week.  Once a substantive response is due, you still have many options.  You can open the negotiation process and attempt to settle the case for a low figure.  You can disagree with the other party’s allegations and tell them that you won’t stop selling your product.  You can disagree with the other party’s allegations but tell them that nevertheless, you’ll stop selling your product. Other options may exist as well. (10) Learn from the experience.  Regardless of whether you ultimately give in to the other party’s cease and desist demand, there are lessons that you can learn going forward.  When you are creating a new work, stop to consider whether the work is wholly your own.  If you did incorporate protected elements into your work, consider licensing them. Consider registering your copyrights and trademarks, both to guard against claims of infringement and to stop others from infringing your works.  Set up your business properly so as to limit your liability.  Learn about whatever insurance options may be available to you to protect yourself going forward.  And finally, keep creating art or facilitating the creation of art. Have any specific questions?  Feel free to contact us to discuss. Nothing in this blog should be relied on as legal advice.  The information contained herein does not create an attorney/client relationship.  The articles posted are intended for entertainment and general information purposes only.  Laws vary by state/province. Anyone seeking legal advice for a specific situation should consult a qualified lawyer or similar qualified professional in the appropriate state.