A cease and desist letter is the initial step to notifying a person to stop engaging in an act. An act that is illegal or infringes the sender’s legal rights or ownership. Usually used when a breach of contract has occurred or in IP infringement cases. This is also commonly referred to as a Letter of Demand. Where the infringement does not cease after receiving letter, then legal or court action may follow.
When receiving a cease and desist letter you may instinctively want to respond in a panic, but you should postpone your response until you have sought legal advice and properly understand what the letter is asking.
Review, Understand & Engage Legal Assistance
Cease and desist letters are often concerned with:
- Infringement of copyright
- Infringing a registered trademark
- Breach of contract
- Alleged harassment
- Alleged defamation
Cease and Desist letters should be taken seriously as they can impose severe legal consequences. Hence, it is critical to carefully review the letter and the claims being made against you. You should review the letter, not merely to understand the content, but to ensure that the allegations are correct.
Seeking legal assistance can better help you review the claim and properly ascertain what the letter is actually saying. Particularly, where you suspect there is legitimacy to the allegations. A lawyer can properly advise you whether the letter has merit, if you must comply with the letter and inform you of your legal rights.
What action should I take?
How you respond to a cease and desist letter is dependent on the legitimacy of the claim and it’s merits. Factors such as the coerciveness of the demands and the firm appearing on the letterhead do not determine the merits of a cease and desist letter. Rather, the specific facts of the case and relevant laws are the determinative factors.
There are three different approaches to responding to a cease and desist letter. Turning upon the facts of the case; you either comply, ignore or respond.
1. Comply with the terms of the demand
Whether the option to comply with the terms of the letter is an appropriate response will be dependent on the severity of the claims. In some circumstances, it is better to just comply with any demands where the request is minor and will not disrupt your business.
Otherwise, litigation may be pursued by the other party which is costly and more risky. Hence, if it is an obvious infringement and can easily be resolved then it is likely more beneficial to comply with the terms of the demand.
2. Ignore
You are under no obligation to respond to a cease and desist letter as it is not a legal instrument. Allegations made in these letters do not always have merit as the issuing party may be bluffing in an attempt to simply coerce you into complying with their demands.
However, ignoring the letter may lead to further problems and is not the preferred response. It is useful to engage with a lawyer to help assess the situation and determine whether ignoring the letter is an appropriate response. Indeed, if you and your lawyer believe it is a bogus and meritless claim, it is sufficient to ignore the demand.
3. Draft a response letter
The final option is to obviously respond to the letter. A response can be drafted to either accept, deny or create a defence to the claims being made. Drafting a response letter provides an opportunity to potentially make your own demand and/or bargain and negotiate with the opposing party.
The response will rest on the facts. Indeed, when deciding to respond to a letter the utmost care must be taken as high risks can be associated with how you respond. Remember it is within your rights to defend yourself where you believe you have not done anything wrong.
You can mount a defence to which either aims to deny the accusations or negotiate to settle the claims. A lawyer can best help determine what your options are and how likely your defence is to succeed.
Indeed, if going to court is inevitable then it is appropriate to file a lawsuit before they do in order to gain a level of control in the situation. Particularly, if you are dealing with a party that operates outside your state.
Phil is a director at OpenLegal. He has over 16 years experience working in private practice and in-house counsel in Sydney and London, giving him expertise in employment law, IP, finance, leases, dispute resolution, insurance and contracts.
Raymond is a legal intern at OpenLegal, working with our legal content team. He is currently a penultimate student at the University of Technology Sydney, studying a Juris Doctor degree with an undergraduate Bachelor of Global Studies. He is particularly interested in Intellectual Property law and the increasing internationalisation of that area of business.
