A cease and desist letter is a document sent to an individual or business to stop purportedly illegal activity (“cease“) and not to restart it (“desist“). The letter may warn that if the recipient does not discontinue specified conduct, or take certain actions, by deadlines set in the letter, that party may be sued
BEFORE SENDING A TRADEMARK CEASE AND DESIST LETTER
On behalf of a client, it is imperative to conduct due diligence and to carefully consider the content and tone of the letter. Such letters may range from a polite invitation to negotiate terms for coexistence, to a request for information as to how the alleged infringer is willing to address your client’s concerns, to a stern demand that the alleged infringer cease all use of a mark by a defined date. Assessing these issues is crucial to drafting an effective letter and may ultimately curb the need for litigation and lead to a favorable resolution for your client.
Pre-drafting Due Diligence
A cease and desist letter should be viewed as a prelude to litigation. Thus, before sending a cease and desist letter, it is imperative to conduct an adequate investigation to identify the nature and extent of the allegedly infringing use.
The extent of diligence that is adequate in a given case depends on a number of factors. you should take the following steps as part of the pre-drafting due diligence process:
Identify and Research the Alleged Infringer(s)
When conducting due diligence, you should first identify and research the alleged infringer(s), which may include:
- The owner of the allegedly infringing mark (whether an individual or corporation)
- Corporate employees, directors, or shareholders of the mark owner
- Corporate parents (e.g., an intellectual property holding company), subsidiaries, or successors
- Licensees, franchisees, distributors, or retailers
Confirm Priority of Use
After identifying and researching the alleged infringer(s), you should next confirm that your client has priority of use. Because trademark rights are based on first use, the party that used a mark first has priority over third parties that make later use of confusingly similar marks (regardless of when or if the mark was registered).
Assess Strength of Your Client’s
Case Once you have identified and researched the alleged infringer(s) and confirmed priority of use, you should next assess the strength of your client’s case as part of your pre-drafting due diligence. Relevant considerations include:
- Whether a likelihood of confusion exists between the alleged infringer’s mark and your client’s mark
- Whether a pre-litigation survey should be commissioned
- The strength of any potential defenses
- Third-party issues/opportunities (i.e., whether your client should attempt to acquire any third-party rights that may be superior to those of your client)
Each issue is discussed in further detail below.
Likelihood of Confusion
Assessing the likelihood of confusion between your client’s mark and the allegedly infringing mark is critical when conducting due diligence
Likelihood of confusion is assessed based on a number of factors, including:
- The degree of similarity between the marks
- The degree of similarity between the goods and/or services
- The fame or strength of the senior mark
- The nature and extent of third-party use for the same or related goods and services
- The context in which purchase decisions are made (i.e., level of care)
- The degree of overlap in trade and promotional channels
- Any evidence of actual confusion
- The good or bad faith of the junior user
Surveys (especially likelihood of confusion surveys) are often a critical aspect of trademark litigation. While surveys are typically commissioned at some point during the litigation itself, you should discuss with your client the propriety of a pre-litigation survey
Strength of Potential Defenses
Identifying the potential defenses that may be asserted by an alleged infringer, and the relative strength of such defenses, is another critical aspect of due diligence
If your client’s registration has become incontestable, the registration is conclusive evidence of validity, ownership, and the exclusive right to use the mark in commerce, subject to the following statutory defenses:
- Fraudulent registration
- Misrepresentation as to source
- Fair use
- Innocent local use
- Use of the mark to violate U.S. antitrust laws
- Equitable principles (including laches, estoppel, and acquiescence)
The number and nature of third-party uses of similar marks for similar goods or services not only impact the strength of your client’s mark for likelihood of confusion purposes, as discussed above, but may also be relevant to your litigation strategy. Specifically, if a third party has rights in a mark that are superior to those of your client (i.e., because the third-party use predates your client’s use), your client should consider acquiring those rights, with or without a license back, for the following reasons:
- To better your client’s position vis-à-vis the alleged infringer (who may attempt to acquire the rights itself upon receiving a cease and desist letter, if your client has not already done so)
- To protect your client against a possible claim of trademark infringement brought by the third party
- To gain the benefits of incontestability (if the third-party’s mark is registered and incontestable)
Assess Risk of a Declaratory Judgment Action
If a cease and desist letter states that the recipient’s conduct is infringing, there is a risk that the recipient will seek a declaratory judgment in its home forum (the letter need not expressly threaten a lawsuit). This would prevent your client from selecting the timing and forum for the litigation or from electing not to proceed with litigation.
Against this backdrop, consider the following when assessing the risk of a declaratory judgment action:
- Is the client prepared to litigate in a forum outside its home forum?
- Is the alleged infringer a company with an incentive to litigate? For instance, has it made a major investment in the allegedly infringing product?
- Has the alleged infringer filed previous declaratory judgment actions or has it otherwise been litigious in the trademark context?
Weigh Business and Legal Ramifications
There are situations in which business reality may clash with legal rights. For instance, an alleged infringer may be selling the accused product to a major customer of your client, who may be displeased if its business is inconvenienced by a disruption in the supply chain. Or the alleged infringer may itself be a major customer of your client with respect to other goods. Gaining a better understanding of such business
Consider Alternatives to a Cease and Desist Letter
Depending on the strength of your client’s case, the gravity of the alleged infringement, and any relevant business and legal considerations, initiating contact with a cease and desist letter may not be the best strategy.
If your client’s case is weak, the offending use is insignificant or likely to end soon, and/or your client is not prepared to litigate for any other reason (e.g., cost concerns, fear of distraction, or other adverse business consequences), consider:
- Taking no action. Sometimes, the sound advice is to take no action if the claim is not likely to succeed or if the cause for concern is minimal or already in decline.
- Monitoring the use. It may be wise in some instances to monitor the alleged infringer’s application file (if applicable) and any changes in the nature or extent of the use, or to track evidence of confusion. If, contrary to expectations, the offending use persists or increases in concern over time, taking action can be reconsidered at a later date.
- Non-legal business solutions. Such business solutions might include a temporary price discount, additional advertising, etc. to counter the infringing use.
If your client’s case is strong and/or the offending use is particularly egregious, consider:
- Taking legal action without prior notice. It is not necessary to send a cease and desist letter prior to filing an action if your client is intent on litigation. Alternatively, you might wish to file a complaint prior to or contemporaneous with sending a cease and desist letter (with a copy of the complaint attached to the letter) to guard against the risk of a declaratory judgment action..
- Filing a motion for temporary restraining order (TRO).
- Business discussions between the parties’ key decision makers. Such discussions may lead to an amicable and mutually beneficial resolution, while also saving your client the time and expense of unnecessary litigation.
- Making the alleged infringer a licensee, customer, or vendor.
If your client decides that sending a cease and desist letter is the best option, you must next determine when to send the letter. There may also be sound reasons to delay for some period of time before sending the letter. For instance, a delay may be warranted in the following circumstances:
- Client’s mark not yet incontestable.
- Secondary meaning in relevant market is unclear
- Alleged infringer has filed a trademark application.
- Marketing and sales considerations.
- Multiple alleged infringers
Guidance on Drafting an Effective Letter
Drafting an effective cease and desist letter on behalf of a client involves a number of considerations, including:
There are generally a number of individuals and entities who may be deemed infringers in a given case. Potential infringers may include the individual or entity who owns the allegedly infringing mark, corporate employees/directors/shareholders, corporate parents/subsidiaries/successors, licensees, franchisors, distributors, and/or retail outlets where the goods are actively sold or services rendered.
Other considerations for specific entities include:
- Manufacturer. May or may not be responsible for use of mark.
- Distributor. May be located in more favorable forum than others in the supply chain.
- Retailer. May resolve issue if customers of the manufacturer stop selling goods bearing the mark
- Retailer’s landlord. May be an approach if a retailer ignores a cease and desist letter (under secondary liability principles).
Trademark cease and desist letters often follow a common pattern and flow and, with respect to issues that commonly arise.
A ceases and desists letter generally includes the following elements:
- Identification of the complaining party, its business, relevant marks
- Identification of the challenged conduct/use
- Statement of basis for concern or complaint:
- Strength of your client’s mark.
- Overlap in trade and promotional/advertising channels
- Any indication of bad faith in adoption of junior mark
- Identifications of action taken already (if any), such as securing an extension of time to oppose a trademark application
- Demand for action or other requests
- Time period within which response is expected
- Consequences (if any) for not taking the requested action
- Disclaimer that the letter does not constitute a complete recitation of all of the client’s rights
A number of considerations may inform the tone of a cease and desist letter,Each consideration is discussed below.
Objective of letter. On one end of the spectrum, a client may merely wish to educate individuals and businesses who appear misguided or ignorant of trademark law and/or the client’s trademark rights.
Potential for negative social media response. In pre-Internet times, cease and desist letters were generally only read by the recipient of the letter and its counsel. In today’s Internet age, however, anyone sending a letter should expect it to be published online, whether as an example of trademark bullying or otherwise held up to ridicule. Your client must be cognizant that a small matter may be viewed by the public in a manner out of proportion to the issue at hand and adjust the tone of the letter accordingly.
Potential for future business relationship. If the parties’ goods and services are related and your client would not be averse to granting a license to the junior user, the letter should reflect a good faith desire to reach a mutually beneficial resolution. The goal in such circumstances is to persuade, not intimidate. The letter should be written as a notice of concern with a request to open negotiations, rather than as a demand for action.
Length of allegedly infringing use. If the recipient has used the mark at issue for a number of years, the recipient may be more likely to defend such use. In such circumstances, your client might consider offering a license or an extended phase-out period and, in general, using a softer approach in the letter.
Client’s commitment to litigate. If your client fully intends to pursue litigation if the dispute cannot otherwise be resolved, the language in the letter should reflect this intention.
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