Receiving a trademark cease and desist letter addressed to your business by a lawyer you have never heard of can be terrifying, but in most cases there is no reason to panic . . .yet. Such letters should be taken seriously because they can be a preliminary step to litigation; however, legal action is typically avoided by the parties and in some cases such letters are without merit. The following are some of the most important issues to consider before deciding how to respond to a letter demanding that you cease and desist from actions that allegedly infringe on the trademark rights of another party.
Is your Company Name, Product, Logo or Tag Line Actually Infringing Upon the Other Party’s Trademark?
To prevail on a trademark infringement claim, the trademark owner must prove that it has a protectable interest in the mark (i.e., distinctiveness) and that your use of the mark is likely to cause consumer confusion. The more generic or descriptive the trademark that is allegedly being infringed upon, the less protection that is generally given to such trademark. Trademarks that are arbitrary or fanciful (i.e. made up words) receive maximum trademark protection.
The central issue of trademark infringement claims is whether the similarity of the marks is likely to confuse customers about the source of the products. Some of the key factors considered in a “likelihood of confusion” evaluation are: (1) the strength of the mark at issue, (2) the similarity of the goods or services of the parties, (3) the degree of similarity of the marks, (4) any evidence of actual confusion caused by the allegedly infringing mark, (5) how and where the goods or services are advertised, marketed and sold, (6) the range and sophistication of prospective purchasers of the goods or services, and (7) the other party’s intent in adopting its mark. The factors considered and the weight given to those factors vary depending on the circumstances and the amount and quality of evidence involved in each trademark infringement claim.
The trademark owner must also prove that it began using the mark prior to your allegedly infringing use of such mark. Registration of a trademark with the U.S. Patent & Trademark Office provides several benefits to the owner of the trademark; however, federal registration is not required to establish trademark rights. “Common law” trademark rights arise from actual use of a mark for particular goods and services and can be used to successfully challenge another party’s subsequent use (and federal registration) of such mark. Common law trademark rights have been developed under a judicially created scheme of rights governed by state law and do not require formal registration of a trademark. If you can establish that your company was using the mark before the other party’s first use, you will have an extremely effective defense to the alleged infringement and the other party may be infringing upon your rights.
Prepare a Response . . . or Ignore It.
Following a review of the matters discussed above and careful consideration of the business issues at stake, you should be in a position to determine whether the best course of action is to: (1) dispute the accusations made in the letter, (2) file a lawsuit against the other party before they have a chance to file theirs (if a lawsuit is unavoidable), (3) comply with the demands of the cease and desist letter, (4) negotiate a settlement of the claims and demands made, or (5) ignore the letter all together.
If you believe that no infringement has taken place, a well-reasoned written response will often be the last communication on the matter. If you do not have enough information to determine if trademark infringement has occurred, you may need to respond by requesting more specific evidence about the trademark owner’s position, including dates of first use, geographic areas where the mark has been used and whether the mark has been federally registered. In many cases, even where you acknowledge that trademark infringement has unintentionally occurred, you will be able to negotiate a period of time to alter the mark and sell off any offending products, or negotiate with the trademark owner for a license to use the mark on mutually agreeable terms.
A cease and desist letter is not a legally binding document that requires a response. Some trademark cease and desist letters are sent with the hope that recipients will be misled, scared or bullied into stopping, or paying for, their use even if there is no legal obligation to do so and there is no intent by the sender to follow up the cease and desist letter with a lawsuit. However, if you do not respond and the other party has a valid claim and financial resources to enforce its rights, you may find yourself faced with a lawsuit that will be far more costly to resolve and includes additional monetary damages for acting recklessly by ignoring accusations of trademark infringement.
Talk to Your Business Advisors.
Take time to research the claims being made in a trademark cease and desist letter, seek advice and make a response that is appropriate for your business and its brand. In most cases it is best to seek legal advice regarding the claims in the cease and desist letter and the rights of the parties under federal and state laws governing trademarks prior to responding to a cease and desist letter. An attorney experienced in trademark disputes can help you decide among the various options in responding to a trademark cease and desist letter and how to implement the right course of action for your business. The attorney can also help ensure that your own trademarks are properly protected and put some procedures in place to reduce the likelihood of receiving another trademark cease and desist in the future.
Thank you for joining us on ClarkTalk! We look forward to seeing you again on this forum. Please note that the views expressed in the above blog post do not constitute legal advice and are not intended to substitute the need for an attorney to represent your interests relating to the subject matter covered above. If you have any questions for the author of this post, please contact Scott D. Page by email at firstname.lastname@example.org or by calling him at (213) 629-5700.