Business Basics: Handling a Demand (Cease and Desist) Letter
What is a Demand Letter?
A Demand Letter, with Cease and Desist letters being among the most common, is a dispute resolution tool that essentially informs an alleged infringer of a legal right that they are violating the owner’s rights and that if certain actions are not taken, litigation or other legal action may be taken. Demand letters may come in many forms, including a suggestion or requirement for specific actions to be taken, which may include financial restitution or entering into an agreement (a general Demand Letter), direct demands and specific actions that may be made to comply with statutory requirements (such as a Digital Millennium Copyright Act (DMCA) Takedown Notice), or a request to stop an infringing activity or refrain from continued use of an infringing article or expression (a Cease and Desist).
Generally, a good demand letter will contain:
· Who is sending it (the creator or rights owner, a law firm or office, a third party or service provider, etc.)
· What it is that they own or have rights to (property, intellectual property, other information or data)
· Proof (or reference to proof) that they actually own it or have legitimate rights to/in it
· Proof (or reference to proof) that you are allegedly infringing on their rights
· Demands or action items
· Contact information (of someone with authority) to discuss the matter or respond to the letter
Why Do People Send Demand Letters?
Demand letters can be a useful tool to prompt action on the end of the alleged violator, a possible way to avoid litigation, which can be expensive and time consuming, and a good monitoring/enforcement tool for rights owners, particularly in the Intellectual Property space. They may be used to start a conversation that may lead to a compromise, license, deal or settlement, or as a possible way to get remedies without having to file a lawsuit. Many of us know of a person who received a notice letter/demand from a music or movie company during the height of the “free” downloading era. Though many seem to be confrontational or adversarial, a demand letter does not have to be a hostile document. A demand letter can be used as a way to try to stop the infringement before any litigation or legal action occurs, to deter future possible violators, or to jolt an alleged infringer into ceasing their infringing activities rather than to seek remedies or punishment. Demand letters may also be used later in the event of a lawsuit to show advance notice was given and that a good faith effort was made to resolve the dispute before litigation occurred.
*NOTE* A demand letter is not a prerequisite to filing a lawsuit and the rights owner does not have to send a demand letter. At any point, even after sending a demand letter, an aggrieved party can resort to any legal action available to them. In the case of a blatant infringement for instance, the rights holder may send a demand letter simply as a courtesy offer in an attempt to resolve the incident without resorting to litigation. If this goes no where, or if they feel the infringer would not be receptive to the letter in the first place, the rights holder could simply choose to file a lawsuit.
What Do You Do If You Receive a Demand Letter?
STEP 1: READ IT!
It is important to make sure that you read and understand what is actually in the demand letter and what the options are for addressing or handling it. If you don’t understand it, get someone to read it and explain it to you! In a good demand letter, those aspects will be clearly laid out, but it is vital that as the recipient, you know why you are receiving the letter and what the rights holder is asking for.
STEP 2: ASSESS YOUR OPTIONS
Assessing your options depends a great deal of factors, including the circumstances surrounding the alleged infringement, who the rights owner is, your possible defenses, your ability to fight a legal battle, the ease/burden of fixing the issue, or your opinion about the assertions or requests made in the letter. It may be that you are willing to admit fault, but do not want to comply fully with the demands in the letter. This could lead you to choose a different response method than you might in another circumstance or structure your communication with the other party in a way that seeks a compromise for any further action.
STEP 3: RESPOND (OR HAVE SOMEONE RESPOND FOR YOU)
After reading and understanding the contents of the letter and assessing your options, you must determine what your response will be. Generally, these responses fall into 4 categories: (1) open communications to discuss the matter without initially acting on the requests (say you didn’t do it, they have no claim, look at dispute resolution options, offer a compromise, etc.), (2) follow the demands/requests in the letter, (3) comply with parts of the demands and not others, while explaining such decision in the response, or (4) refuse to follow the demands/requests in the letter or do nothing.
Generally, unless the letter states that you don’t need to do anything further (if it requested for you to “cease and desist and no further action will be taken” for instance), you should always respond to the letter in some fashion. Particularly if there are demands, responding is important, even if the response is that you are refusing to follow the demands.
STEP 4: TAKE ACTION
Once you have responded to the demand letter, the most important thing for you to do is to take action. If the letter asks for a particular action and especially if you have responded that you are going to take a certain action, MAKE SURE YOU DO IT! If you are going to cease and desist, make sure you take steps to ensure you are complying and communicate this with the other party. If you are not complying with the demand, ready a defense and wait for their response or get ready for a lawsuit.
One final note: Be kind and courteous. Or at least not rude. I have actually seen demand letter situations escalate or fail to resolve for no other reason than the audacity in a demand or the flippant or dismissive tone of a response. Remember that demand letters are meant to be a means of conflict resolution, rather than conflict instigation and act with respect when dealing with a demand letter situation.
