Cease and desist letters are in-house counsel’s first line of attack when presented with allegations of misconduct that threaten the company’s business. Whether a competitor is infringing your trademarks, interfering with your business relationships, or trying to raid your sales force, an effective cease and desist letter can often stop the offending conduct in its tracks.
In-house lawyers are called upon to write cease and desist letters on a daily basis. Business people confronted with improper conduct by competitors, clients, and others look to their in-house counsel for quick analysis and an immediate response, and the trusty cease and desist letter is often the first weapon to be deployed. Cease and desist letters add value even when they do not result in an immediate cessation of the wrongdoing, as they serve to put the wrongdoer on notice of the company’s claims, lay the foundation for recovering damages, and cut off any potential defense based on lack of knowledge or intent. But before you pull up the cease and desist letter you wrote last week and start modifying it to fit the current situation, there are several key issues to carefully consider.
First, consideration should be given as to who should author the cease and desist letter. Typically, the conduct at issue will be brought to the attention of in-house counsel from company employees or executives; as a result, in-house counsel will have the most direct access to the facts and will be in the best position to promptly prepare the letter. Given that the primary goal of a cease and desist letter is to quickly and efficiently resolve a situation without resort to litigation, there are good reasons for in-house counsel to prepare and author the letter. However, utilizing outside counsel to deliver the message can send a much stronger signal to the wrongdoer: the fact that the corporation has involved an outside law firm means that it views the situation very seriously, and the threat of litigation if the conduct continues is real.
Second, in-house counsel should consider whether to include in the cease and desist letter a demand for the preservation of documents. Such a demand puts the adversary on notice of potential litigation and triggers the duty to take steps to preserve all relevant evidence. In the corporate context, this typically requires specific actions such as notifying information technology personnel to suspend automatic e-mail deletion programs and notifying employees in the affected business unit to preserve both hard copy and electronic documents. The mere prospect of having to engage in this process will often cause the recipient of the cease and desist letter to take the issues raised more seriously. Moreover, spoliation of evidence—particularly with respect to electronic data—is an issue that can have huge consequences in any litigation arising out of the situation. In addition to monetary sanctions, courts can strike claims or defenses if the spoliator is found to have destroyed relevant evidence, even unintentionally.
Third, in-house counsel should ensure that the letter makes a specific demand for action within a defined timeframe. Open-ended demands invite dialogue, which in turn engenders delay, allowing the infringement, interference, or other harmful conduct to persist. Specific demands for action, on the other hand, force the recipient to make a calculated decision to either continue or discontinue the activity at issue. As a result, the company will have some certainty and can make a decision as to whether litigation is necessary and worthwhile. The deadline must be firm but also realistic, as unreasonable demands can be seen for what they often are—a bluff.
Finally, in-house counsel must balance the pressure from the business side for immediate action with the necessity of thoroughly and carefully investigating the relevant facts. Although the in-house lawyer’s clients will often possess extraordinary business acumen and expertise, most have no legal training; as a result, even the most well-intentioned business person may not appreciate the legal significance of certain facts and thus may not communicate all relevant information to counsel. Ultimately, the in-house lawyer who takes the time to investigate the situation thoroughly and fully, and asks the hard, probing questions of his or her clients up front, will be able to craft a more effective cease and desist letter.
Cease and desist letters are an invaluable tool for in-house lawyers and the businesses they represent, and if properly crafted can serve a variety of purposes. Even if a cease and desist letter does not reap the ultimate reward—an immediate cessation of the offending conduct— at a minimum it can put the company in the best possible position should litigation ensue. To ensure that your cease and desist letter has the maximum effect, care should be taken when probing the underlying facts and researching the applicable law, and due consideration should be given to all of the issues discussed above.