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Are you getting sued? What getting a Cease and Desist letter means for you.

January 26, 2011 by
Filed under: law 

The dreaded Cease and Desist letter.  The Demand letter.  The C&D.  These are the tools in every lawyer’s repertoire when the client decides a private letter may accomplish their goals more effectively than a spending years and many thousands (or millions) of dollars in litigation.  Litigation is almost always preceded by a Cease and Desist letter.  The logic being: why spend time, money, and energy to have a judge order someone to do something that they would have agreed to anyway had you just asked (with the right persuasion, of course).

The vast majority of lawsuits end in a settlement.  Additionally, an untold amount of claims are settled even before a lawsuit is filed.  (Lawsuits are a matter of public record, but if a settlement is reached before a lawsuit is filed there is no public record of a settlement being reached.)

How do you know you’ve received a Cease and Desist letter?

Large companies can just forward legal looking documents to their in-house counsel or law firm on retainer.  For small businesses and individuals a potential lawsuit means a significant unbudgeted expense, even if it’s just paying a lawyer to tell you it’s ok to ignore the letter.  Knowing what you are looking at and its implications can be extremely important when establishing how best to respond to a Cease and Desist letter.

Here are some tell tale signs that the document you are looking at is a Cease and Desist letter:

  • You had to sign for it.  C&D’s will often be sent with a “return receipt requested” so there is proof that you received the letter.  This is not a requirement, however.
  • The letter contains language like “In light of your ongoing infringement we hereby DEMAND that you CEASE & DESIST all actions relating to…”.  Frequently (but not always) the term “Cease and Desist” will be right there in the letter.
  • Anytime a letter demands that you take an action (take down your website, pay $10,000, etc.) based on activity that they claim is unlawful it is likely a Cease and Desist letter.
  • The letter is on a law firm’s stationary and/or is signed by a lawyer.  (Lawyers will often follow their name with the abbreviation “Esq.”, though they do not have to.  Ex: John Doe, Esq.)

Understanding a Cease and Desist letter.

Lawyers frequently use language that is hard to understand or downright archaic.  If you aren’t familiar with reading legal documents your only option may be to hire a lawyer to interpret the letter for you.  Let me be clear: hiring a lawyer is your safest action for ensuring you don’t make a legal miss-step that may be detrimental to you or your business’ well being.  Even if the hereins, wherefores, run-on sentences, and legal code make the letter incomprehensible to someone with a sensible appreciation for the English language, there are still a few things you can learn from the letter before going to see a lawyer.

  • An important first question is: did a lawyer write this letter?  I’ve seen Cease & Desist letters written by non-lawyers that have a double dose of legal sounding words and no substance.  If a lawyer has written the letter it tells you two things: 1.) It is likely not an outright lie, as lawyers can lose their license to practice by making frivolous legal claims or sending out fraudulent letters (all lawyer jokes aside), and 2.) The person who sent the letter is fairly serious as they have shown their willingness to hire a lawyer to pursue the claim.  Just because a letter is not from a lawyer does not necessarily mean the sender is not serious about pursuing the matter further, however.  The sender can always hire a lawyer after they send the letter.
  • Do some research into who wrote the letter.  Are they writing on behalf of a company or an individual?  Is it the legal department of a Fortune 500 company, or Joe Schmoe from across town?  The bottom line is you want to find out how much money they are willing to spend.  The more money they have the greater the chance they are going to be willing to spend it on pursuing a legal claim against you (all other things being equal).  Be happy if you can’t find information about the sender on the internet.
  • Look for legal citations.  The citations will often look like “17 U.S.C. §205”, “Va Code Chapter 22, Section 3”, or “Marbury v. Madison”, amongst many other forms (Cornell has a good resource on legal citation if you’re having trouble going to sleep).  Individuals will often get form Cease & Desist letters off the internet.  Sometimes lawyers will offer a cheap version of a C&D which involves the lawyer filling out their own template and signing the bottom.  These form C&D’s will have a lack of citation, because citation to relevant law generally requires legal research.  If the letter you received does not use legal research as its foundation you can assume: 1.) The sender has not spent a great deal of money and/or effort on having the letter drafted, and 2.) The sender may not have a deep understanding (or any understanding) of their legal claims against you because they have not researched it thoroughly.  A lack of legal citation is a good sign for the recipient.

What is a Cease and Desist letter really?

A Cease and Desist letter is an offer to enter into a contract with the sender or the sender’s client.  That’s it.  The police are not involved, neither are judges or the courts.  You have no obligation to accept the terms of the offer, or even respond (though it is often in your best interest to respond).  The letter is not a public document, its form and contents are not specifically governed by law, and receiving a Cease and Desist letter does not mean a lawsuit has been filed against you.  (It is important not to confuse a Complaint or similar document that is filed with a court as a C&D.  If you think the document you received may be notice of a lawsuit being filed against you do not ignore it.  I strongly suggest you obtain legal advice if you think you might have been named in a lawsuit.)

A C&D is an offer to enter into a contract, and generally speaking a contract is an agreement between people or companies where each side exchanges promises to the other.  In the context of a C&D you may promise to pay the sender $10,000 and the sender may promise not to sue you.  The value of a lawyer is in telling you whether this contract is a good deal for you or not.  Of course, a refusal to enter into a contract with the sender of the Cease and Desist may end in you being sued.  However, not everyone that sends a C&D is prepared to take on the risk and expense of litigation, and it’s possible that the Cease & Desist sender may never contact you again.  Betting on them not filing suit can be a big risk to take, however.

Conclusion

Receiving a Cease and Desist letter is not the end of the world, it’s just a letter.  Even if it looks like gibberish you can still take the time to get some idea of the position you’re in.  Keep in mind, however, that there is no substitute for the advice of a lawyer, especially when it’s you or your company in the crosshairs.

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