A cease-and-desist (C&D) letter typically demands that the recipient stop (cease) doing something now and avoid (desist from) doing it in the future, or risk being sued. The steps you take after receiving a C&D letter can critically impact how the potential dispute affects your business (as discussed in our related IP Update regarding trademark and brand protection).
In patent disputes, C&D letters are frequently used to advise the recipient that they are infringing the patent rights of the patent holder and demanding the recipient to stop. Sometimes the patent holder may offer the recipient a license to the patent at issue. A C&D letter may fall across a spectrum of threatening to friendly, depending on the sender, the recipient, and the nature of the allegations/accusations.
If you receive correspondence that you believe is a C&D letter, stop and consider these five steps:
- Consult an intellectual property lawyer.
- Make note of the deadline.
- Consider the merits.
- Evaluate your options and respond.
- Gather and preserve your records.
1. Consult an intellectual property lawyer.
If you receive a C&D letter for patent infringement, you should consult with an Intellectual Property (IP) lawyer with expertise in patent infringement litigation. Intellectual property law is a highly specialized practice area. It is important to obtain counsel who is familiar with patent litigation to put yourself in the best position moving forward.
Patent infringement allegations are often rooted in complex and highly technical facts and can take time to properly investigate. Consulting with an experienced IP lawyer quickly after receiving a C&D letter makes for the best use of the time leading to the sender’s proposed deadline, and will set you up to properly consider the allegations, gain an understanding of your risk level, and evaluate the next steps.
2. Make note of the deadline.
A C&D letter will typically include a deadline for you to respond and confirm your compliance with the demands. A deadline may have been chosen randomly or may be intentional and especially important where there is a risk of fast-approaching harm or legal deadlines by which the sender needs to commence litigation.
Even if you do not intend to comply with the demand, there is value in responding by the identified deadline to try to resolve or reduce the conflict, or to demonstrate to a future judge or arbitrator that you did not simply ignore the request.
If the deadline is too quick for you to respond meaningfully, you can consider sending a short-term response that you will need additional time to investigate the allegations and/or seek legal advice.
3. Consider the merits.
Just because someone sent you a C&D letter, it does not mean they have a (strong) claim against you. When evaluating the merits of a C&D letter, consider the sender and the nature of the complaint. Questions to ask yourself include:
- Does the sender appear to have the rights it is asserting?
- Does it seem like your actions infringe on the sender’s rights?
- How important are your allegedly infringing activities with respect to your business interests?
- What is the bigger picture?
- Is there a relationship between you and the sender that you wish to preserve?
- Are there other aspects to the dispute between you and the sender beyond the patent infringement allegations, such as employment considerations or allegations of breach of confidence?
Considering the merits at the outset will give you a better understanding of the possible risks you are facing. Experienced patent litigation counsel can assist you in evaluating your position, including the questions above.
4. Evaluate your options and respond.
How you respond to the C&D letter will depend on various factors, including the nature and strength of the allegations and the possible commercial interests at stake. Among other options, you may choose to comply with the demands, deny any wrongdoing through a responding letter, or explore the possibility of mutually agreeable patent licensing terms.
All correspondence with the sender should be made on a ‘without prejudice’ basis to prevent any such correspondence from being used as evidence by the sender in future court proceedings.
You should also be careful not to make any public statements or comments to any third parties about the dispute without first discussing it with an IP lawyer.
5. Gather and preserve your records.
Even if you receive a C&D letter that does not expressly threaten litigation, a lawsuit is a possible outcome. For this reason, as soon as you receive a C&D letter, you should put a “litigation hold” in effect, where you preserve all records that may be relevant to a lawsuit later. This will help you avoid any allegations that you intentionally deleted or destroyed records that you would have been required to provide to the other side during the litigation.
What you preserve depends on the nature of the allegations, and you should seek legal advice to ensure that you safeguard the proper records.
Receiving a C&D letter can present new and difficult challenges for your business. If you need any help with any of the steps outlined above, please do not hesitate to contact the authors or one of the other members of the IP Litigation & Enforcement group at Smart & Biggar.The preceding is intended as a timely update on Canadian intellectual property and technology law. The content is informational only and does not constitute legal or professional advice. To obtain such advice, please communicate with our offices directly.
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