You’re on a roll. A big chain has placed a huge order for your brand new product. Business is better than it’s ever been. Suddenly, you receive a “cease and desist” from a competitor.
Or worse, your biggest customer receives one, about your product, and has called you to “discuss” it. Bad timing? Not really. You just weren’t big or successful enough to get on anyone’s radar before now.
So what to do?
Call your lawyer
Yes, this column is about assessing risk and decision-making on intellectual property issues. Before this month’s column, my first suggestion has never been to “call your lawyer.” And I’m still not suggesting it should be the first thing you should do. But it really is the most important. So it’s my first suggestion. The reason is that your intellectual property lawyer really is best equipped to quickly help you assess how valid the claims in the letter are. That is - does the person asking you to “cease and desist” have a good case against you?
While this is probably the most important thing you can do, there are some things you can do to help your lawyer make this assessment (and thus lower the cost of making this assessment). And there is some analysis you can do to help determine your business risk.
The Cease and Desist
The first step is identifying the letter as a “cease and desist.” Many of these letters actually use the words “cease and desist,” so they are easy to identify. Others are more difficult. The letter may be from a company you’ve never heard of, suggesting you, as a company making a certain kind of product, may be interested in licensing their technology. It may be a “friendly” letter from a known competitor, drawing your attention to certain patents they own, without any specific allegations that you are infringing their rights. On the other end of the scale, it might be a registered letter stating that a court action has been started against you in some strange and faraway place, like Texas.
The language might be different, but the message is similar: your product infringes their intellectual property. They want you to do something about it.
The appropriate course of action depends on many variables. The one your lawyer can help you with the most is how correct their message is - are you infringing their intellectual property? But other variables should be considered. Some of these can be determined quickly and easily.
Who sent the letter?
The letter was sent by an individual, a company, or a law firm. Whoever sent it, it was sent on behalf of the owner or exclusive licensee of the intellectual property you have been accused of infringing.
So who is this? Have you heard of the company? Are they a direct competitor, or in a completely unrelated field?
Do they make a business out of licensing their technology? How big are they, in terms of sales? In terms of licensing revenues?
How many patents/trademarks/designs/copyrights etc. do they own? Have they been involved in any other intellectual property litigation? Against who? Were they successful?
Was that litigation against a known/common competitor, or because of a sale of a product similar to yours? Are they after your clients/sales directly? Have you been eating into their market share?
A lot of this information can be found fairly easily using standard internet searches. If the company is a public company, much of this information can be found in their securities disclosures (like their annual report). Even for a private company, it’s amazing the amount of information that can be quickly and easily obtained on the internet.
Although less important, if the letter was sent from a law firm, there’s information to be obtained there, too. Where is the law firm located? Are they big or small? Do they do a lot of intellectual property litigation? And who signed the letter? Corporate counsel, or is the letter from an intellectual property litigator? A junior, or an experienced member of the bar? Sometimes, this kind of information can be useful, but, as you might expect, it should be treated with caution - it can also be quite misleading.
All this information puts the letter in context. It helps you build a picture of who is behind the letter, what they want, and whether they are likely to get it. It’s also hugely helpful to provide this kind of information to your lawyer, so they have some context - and obtaining as much of this information yourself helps keep lawyer costs under control.
Who was the letter sent to?
Often, the letter will be sent directly to you. But sometimes, the letter will be sent to your retailer or distributor. Most of the time, this is for one of two reasons: either the person sending the letter was unable or unwilling to determine who and where you are; or the person believes it will be more effective to warn your customer. In cases where they send the letter to your retailer, likely, they sell a very similar product, and they want your retailer to stop selling yours.
Remember that your retailer can often pick and choose what product to sell - and a product without intellectual property issues is much easier to stock and sell than one with such issues. Telling your retailer to “cease and desist” is a way of telling them to stop selling your product, and start selling their product instead.
If your retailer calls you saying they received a cease and desist, it’s very important to keep your retailer as happy as possible - usually, this is done by addressing the issues quickly and professionally, with the help of counsel. Prompt and proactive communication with your client is key.
A retailer is more likely to continue to stock your product if they are convinced that you take the letter seriously - that you’ve had IP counsel review the letter, and determined the risk that the product will be taken off their shelf.
What do they want?
There are really only two possibilities here: do they want you to stop your activities, or do they want you to pay them something (i.e. license their technology to you)? You can get some idea of which of these is more likely based on the wording of the letter, but you can get an even better idea based on the research you’ve done as to who sent you the letter, and what business they are in. If they are making a directly competing product, chances are, they want you to stop selling yours. If they’re in a different space, they may realize that a license would be more of a “win-win.” The size of the company, and their market share relative to yours, may also play a role.
How detailed is the letter?
In short, does it look like a form letter that they send to everyone in your space, or are there specific details related to your product, your use, or your situation? Do they mention patent or trademark registration numbers specifically, or is it a more general statement that you are infringing their estate? Do they have photos of your purportedly infringing product or mark? A broad and general letter doesn’t tell you much (they may have done the research but decided not to include it in the letter), but an extremely detailed letter tells you they’ve already got a lot invested in the letter.
How much of your business is effected?
Another key question to try to answer is “how much of your business is effected?” Is the allegation that a major product is infringing, or is it marginal to your business? Is the disputed intellectual property a trademark that isn’t core to your business, or is it your most important mark? If the “cease and desist” is for something that isn’t key to your business, it may be easier (and less expensive) to make the business decision to comply (regardless of how strong the other party’s case is).
If the product they’re asking you to stop making is 95% of your business, their case is good, and they’re a serious, large player, alternative options, such as a license, or designing around their patent portfolio, might be good options to explore.
The questions posed here, and their answers, put a “cease and desist” in context. A cease and desist is almost never something to be ignored. But your business strategy going forward may have as much to do with who you’re facing, as how strong their case is.
This is the fifth article in a series that discusses real-world intellectual property issues for non-patent professionals. The series is meant to provide the business manager with some insight, context and useful tools for how to deal with patent-based issues on a business level. This article is not legal advice or opinion. Intellectual property issues are complex and often unique circumstances need to be considered. Consult your intellectual property professional before making any decisions based on the educational information provided below.
Charles Boulakia, M.Sc., MBA/LLP., is a patent attorney with the Toronto-based IP firm Ridout & Maybee LLP ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it ).
www.ridoutmaybee.com
Click here for his previous blog.
So what to do?
Call your lawyer
Yes, this column is about assessing risk and decision-making on intellectual property issues. Before this month’s column, my first suggestion has never been to “call your lawyer.” And I’m still not suggesting it should be the first thing you should do. But it really is the most important. So it’s my first suggestion. The reason is that your intellectual property lawyer really is best equipped to quickly help you assess how valid the claims in the letter are. That is - does the person asking you to “cease and desist” have a good case against you?
While this is probably the most important thing you can do, there are some things you can do to help your lawyer make this assessment (and thus lower the cost of making this assessment). And there is some analysis you can do to help determine your business risk.
The Cease and Desist
The first step is identifying the letter as a “cease and desist.” Many of these letters actually use the words “cease and desist,” so they are easy to identify. Others are more difficult. The letter may be from a company you’ve never heard of, suggesting you, as a company making a certain kind of product, may be interested in licensing their technology. It may be a “friendly” letter from a known competitor, drawing your attention to certain patents they own, without any specific allegations that you are infringing their rights. On the other end of the scale, it might be a registered letter stating that a court action has been started against you in some strange and faraway place, like Texas.
The language might be different, but the message is similar: your product infringes their intellectual property. They want you to do something about it.
The appropriate course of action depends on many variables. The one your lawyer can help you with the most is how correct their message is - are you infringing their intellectual property? But other variables should be considered. Some of these can be determined quickly and easily.
Who sent the letter?
The letter was sent by an individual, a company, or a law firm. Whoever sent it, it was sent on behalf of the owner or exclusive licensee of the intellectual property you have been accused of infringing.
So who is this? Have you heard of the company? Are they a direct competitor, or in a completely unrelated field?
Do they make a business out of licensing their technology? How big are they, in terms of sales? In terms of licensing revenues?
How many patents/trademarks/designs/copyrights etc. do they own? Have they been involved in any other intellectual property litigation? Against who? Were they successful?
Was that litigation against a known/common competitor, or because of a sale of a product similar to yours? Are they after your clients/sales directly? Have you been eating into their market share?
A lot of this information can be found fairly easily using standard internet searches. If the company is a public company, much of this information can be found in their securities disclosures (like their annual report). Even for a private company, it’s amazing the amount of information that can be quickly and easily obtained on the internet.
Although less important, if the letter was sent from a law firm, there’s information to be obtained there, too. Where is the law firm located? Are they big or small? Do they do a lot of intellectual property litigation? And who signed the letter? Corporate counsel, or is the letter from an intellectual property litigator? A junior, or an experienced member of the bar? Sometimes, this kind of information can be useful, but, as you might expect, it should be treated with caution - it can also be quite misleading.
All this information puts the letter in context. It helps you build a picture of who is behind the letter, what they want, and whether they are likely to get it. It’s also hugely helpful to provide this kind of information to your lawyer, so they have some context - and obtaining as much of this information yourself helps keep lawyer costs under control.
Who was the letter sent to?
Often, the letter will be sent directly to you. But sometimes, the letter will be sent to your retailer or distributor. Most of the time, this is for one of two reasons: either the person sending the letter was unable or unwilling to determine who and where you are; or the person believes it will be more effective to warn your customer. In cases where they send the letter to your retailer, likely, they sell a very similar product, and they want your retailer to stop selling yours.
Remember that your retailer can often pick and choose what product to sell - and a product without intellectual property issues is much easier to stock and sell than one with such issues. Telling your retailer to “cease and desist” is a way of telling them to stop selling your product, and start selling their product instead.
If your retailer calls you saying they received a cease and desist, it’s very important to keep your retailer as happy as possible - usually, this is done by addressing the issues quickly and professionally, with the help of counsel. Prompt and proactive communication with your client is key.
A retailer is more likely to continue to stock your product if they are convinced that you take the letter seriously - that you’ve had IP counsel review the letter, and determined the risk that the product will be taken off their shelf.
What do they want?
There are really only two possibilities here: do they want you to stop your activities, or do they want you to pay them something (i.e. license their technology to you)? You can get some idea of which of these is more likely based on the wording of the letter, but you can get an even better idea based on the research you’ve done as to who sent you the letter, and what business they are in. If they are making a directly competing product, chances are, they want you to stop selling yours. If they’re in a different space, they may realize that a license would be more of a “win-win.” The size of the company, and their market share relative to yours, may also play a role.
How detailed is the letter?
In short, does it look like a form letter that they send to everyone in your space, or are there specific details related to your product, your use, or your situation? Do they mention patent or trademark registration numbers specifically, or is it a more general statement that you are infringing their estate? Do they have photos of your purportedly infringing product or mark? A broad and general letter doesn’t tell you much (they may have done the research but decided not to include it in the letter), but an extremely detailed letter tells you they’ve already got a lot invested in the letter.
How much of your business is effected?
Another key question to try to answer is “how much of your business is effected?” Is the allegation that a major product is infringing, or is it marginal to your business? Is the disputed intellectual property a trademark that isn’t core to your business, or is it your most important mark? If the “cease and desist” is for something that isn’t key to your business, it may be easier (and less expensive) to make the business decision to comply (regardless of how strong the other party’s case is).
If the product they’re asking you to stop making is 95% of your business, their case is good, and they’re a serious, large player, alternative options, such as a license, or designing around their patent portfolio, might be good options to explore.
The questions posed here, and their answers, put a “cease and desist” in context. A cease and desist is almost never something to be ignored. But your business strategy going forward may have as much to do with who you’re facing, as how strong their case is.
This is the fifth article in a series that discusses real-world intellectual property issues for non-patent professionals. The series is meant to provide the business manager with some insight, context and useful tools for how to deal with patent-based issues on a business level. This article is not legal advice or opinion. Intellectual property issues are complex and often unique circumstances need to be considered. Consult your intellectual property professional before making any decisions based on the educational information provided below.
Charles Boulakia, M.Sc., MBA/LLP., is a patent attorney with the Toronto-based IP firm Ridout & Maybee LLP ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it ).
www.ridoutmaybee.com
Click here for his previous blog.
Charles Boulakia
Intellectual Property for Management online Columnist: Associate – Barristers & Solicitors, Ridout & Maybee LLP, his practice is principally directed towards the preparation and prosecution of patent applications.
Latest from Charles Boulakia
|
|
|
Featured Videos
-
Philip Harting, senior vice president of Harting Inc., spoke with DPN editorial director Mike Edwards at last week's Hannover Messe 2012. Harting spoke about the importance of the annual trade fair, the emergence of his company on the global stage, the need for corporate governance on carbon dioxide emissions and on Harting energy management technologies.
-
See Video...
Harting has launched its RJ Industrial 10G Ethernet connector. Rated IP20 for the office IT environment, the lockable, 8-wire RJ45 requires no tools or expertise to assemble. An angled version is also available.
-
See Video...
With Creo 2.0, PTC has introduced a new role-specific app supporting modular product design that extends how organizations can approach concept design, and is said to deliver significant productivity enhancements to its existing Creo apps. Raphael Nascimento, PTC product management manager, explains.
-
See Video...
The live video signal from a Pepperl+Fuchs LS680 Ethernet optical data coupler on an automated storage and retrieval system can be used to correctly position the pallet within minutes from a remote location like a control room.
-
See Video...
Demonstration of SpaceClaim Engineer 2012, a multi-purpose 3D CAD tool that performs direct modeling operations on parts and assemblies.
-
See Video...
At Hannover Messe 2012, Andre Brauers, Turck Industrial Automation product manager for linear position sensors, encoders and inclinometers, describes the latest in rotary position sensing technology.
Popular Articles
