It can be distressing to receive a legal cease and desist letter accusing you of infringing another business’ trade mark or copyright, even for seasoned businesses. Especially so as these letters generally set out all the severe legal repercussions that could follow if you don’t comply with the accusing party’s demands, often including claims that you will be forced to pay substantial damages, legal costs and destroy stock or marketing materials. And possibly even rebrand your business.
So what should you do when you receive a letter of demand?
It won’t disappear if you ignore it.
A legal letter doesn’t necessarily mean that the party who sent it is about to rush off to Court. However, ignoring a cease and desist letter is a dangerous strategy. In some cases, where a party firmly believes that their intellectual property rights have been infringed and their business is suffering immediate harm, they may well take urgent legal action if their first letter of demand has been completely ignored.
In addition, Courts can order a party to pay “additional damages” in intellectual property infringement matters, which is an amount over and above the wronged party’s financial losses and has a punitive element to it. One of the things that a Court will look at when deciding whether to award additional damages is the infringing party’s conduct after receiving the cease and desist letter. So, in a nutshell, you could end up paying much more because you didn’t respond to the letters sent to you before legal action.
Should you immediately remove the infringing goods or material?
Suppose you know that your goods or services are infringing another party’s intellectual property rights, for example, because you deliberately imported counterfeit goods. In that case, you should comply with the cease and desist letter immediately. However, in most cases, you should seek urgent legal advice before deciding how to respond.
Copyright or trade mark infringement can be complex areas of law, and there is not always a clear black and white answer as to whether you are infringing or not. A party may argue that your brand name is too similar to theirs when you strongly believe that they are substantially different.
You will want legal advice from an Intellectual Property lawyer before you decide on the next steps. This is important because it can be difficult to backtrack once you’ve committed to a particular course of action. For example, say you get a cease and desist letter claiming that the swimwear you are selling online is infringing another business’ copyright. Because the letter is so strongly worded, you immediately decide to remove all of the allegedly infringing swimwear. You subsequently get legal advice that the other side’s claims are weak and unlikely to succeed in Court. Your removal of the goods could be seen as an admission by you of your liability and puts you on the back foot in subsequent settlement negotiations.
Sending a response without getting legal advice
As mentioned above, your action (or inaction) on receiving a cease and desist letter can have serious consequences. Intellectual Property law is complex, and committing to a position before properly understanding your rights could have dire consequences. You could end up paying a substantially higher amount of damages, jeopardise your ability to resolve the matter commercially by weakening your bargaining position or even relinquishing rights that you shouldn’t have had to. Ideally, you should seek legal assistance as soon as you receive the letter.
How can we help?
Our lawyers at Level Up Legal can advise you of your legal position when you receive a cease and desist letter and work out the best strategy to help you resolve the matter as quickly and cost-effectively as possible.
Contact us for an initial free chat and to get a fixed fee quote.