I Received a Cease and Desist Letter. What Now?

What a cease and desist letter is and is not

It is a private letter asking you to stop specified conduct and often to confirm in writing that you have. It is not a court order, a lawsuit or a finding by anyone that you did something wrong. No penalty attaches to ignoring it as such. What the letter does is establish that you knew of the claim from the date you received it, and that matters for three reasons: continued conduct after notice can look willful, your duty to preserve evidence has attached, and the sender has made a record for an injunction hearing.

The letter will usually fall into one of a few categories, each with its own law: trademark or trade name, trade secret or confidential information, non-compete or non-solicitation, defamation or disparagement, or interference with contracts. Identify the category before anything else, because the question "do they have a case?" is answered differently in each.

The first 48 hours

1. Preserve. Issue a written instruction to everyone involved not to delete, edit or move anything related to the conduct described: emails, messages, files, social media posts, website pages, customer records. Suspend automatic deletion. Texas law treats a party who destroys relevant evidence after litigation is reasonably anticipated as a spoliator, and a cease and desist letter is proof of anticipation. The Supreme Court of Texas set the framework in Brookshire Brothers, Ltd. v. Aldridge in 2014. What a hold requires is covered in what a litigation hold letter requires of your company.
2. Do not take down, delete or alter the thing complained of before deciding. Taking a website page down may be the right call, but deleting it destroys evidence of what it actually said. Archive first, then decide.
3. Do not reply on the day. An angry or defensive reply is the single most common way recipients make these letters worse. Acknowledge receipt in two sentences if you want to, and set your own date for a substantive response.
4. Check insurance. Some commercial policies cover advertising injury, which can include trademark and disparagement claims, and most require prompt notice of a claim.
5. Calendar the sender's deadline, then treat it as what it is: their schedule, not yours.

Does the sender actually have the right they claim?

Many cease and desist letters are stronger in tone than in law. Before deciding anything, test the claim.

Trademark. Does the sender have a registration, or only use? Is the mark descriptive or generic? Who used it first, and where? Are the goods and customers actually similar enough to cause confusion? A letter from a company in a different industry, or one that adopted the name after you did, may have no claim at all. The trademark version of this letter has its own guide, what to do about a trademark cease and desist letter.

Trade secret. Is the information actually secret, or is it known in the industry, published or reverse-engineerable? Did the sender take reasonable measures to protect it? Did you or your new hire actually take anything, or is the letter assuming it? If the letter concerns a new employee, the company's exposure and the steps to limit it are in defending the company when a new hire is accused of bringing trade secrets.

Non-compete. Texas enforces non-competes only when they are ancillary to an otherwise enforceable agreement and reasonable in time, geography and scope. A covenant that is overbroad can be reformed by a court, but a party who sues to enforce an overbroad covenant without first trying to reform it faces limits on recovery. Whether a covenant holds up is examined in whether a non-compete is enforceable in Texas.

Defamation. Is the statement one of fact, or opinion? Is it true? Did you publish it, or did someone else? If the sender sues over speech on a matter of public concern, which includes most statements about a business's goods and services, the Texas Citizens Participation Act allows you to move to dismiss within 60 days of service, suspends discovery, and requires the court to award your fees if the sender cannot show clear and specific evidence of each element. A letter demanding you remove a truthful or opinion-based statement is often a letter the sender cannot afford to follow up.

Your four options

Comply

Right when the sender's claim is sound and the conduct is not worth a fight: a name you can change, a former employee's contact you can stop, a page you can edit. Comply in writing, state what you have done, and say that compliance is without admission of liability. Do not agree to anything beyond stopping, such as paying damages or signing a broad undertaking, without advice.

Negotiate

Right when both sides have something: you want to keep part of what you are doing, they want certainty. Coexistence agreements in trademark disputes, narrowed non-solicitation terms, agreed takedowns with no admission, and standstills while a former employee's devices are examined are all common outcomes. Negotiation also buys time to investigate.

Refuse, with reasons

Right when the claim is weak. A short letter stating that you have reviewed the matter, that you dispute the claim for stated reasons, that you will not be changing your conduct, and that you reserve all rights. Specific reasons, calmly stated, tell the sender's lawyer what they will face. Do not threaten; a reservation of rights says everything a threat says.

File first

Right when the dispute is going to court regardless and forum or timing matters. A declaratory judgment action asks a court to rule that you are not infringing, not bound or not liable. It puts you in the plaintiff's seat and in your chosen venue. It is also a commitment to litigation, so it is not a response to a letter you could otherwise negotiate away. Whether a letter from a lawyer should be answered by a lawyer is discussed in whether a lawyer's letter carries more weight.

Example

Suppose a Dallas landscaping company receives a cease and desist letter from a company in Houston with a similar name, demanding that it stop using the name within ten days, destroy all signage and marketing, and confirm compliance in writing. The Dallas company has used the name for nine years; the Houston company's registration is three years old and covers the Houston area in practice. The Dallas company archives its website and marketing, pulls its formation documents, early invoices and first advertisements, and consults counsel. The response, two weeks later, states the Dallas company's prior use with dates and documents, disputes any likelihood of confusion between businesses 240 miles apart, declines to change the name, and offers to discuss a written agreement defining each company's territory. The Houston company's lawyer, faced with a documented prior user, recommends the agreement.

What happens if you ignore it

Nothing automatic, and sometimes nothing at all. But if the sender does file, you will have continued the conduct after notice, which in trademark, trade secret and non-compete cases is the fact the plaintiff most wants to prove. You may also face a temporary injunction application in which your silence is presented as refusal. A response that disputes the claim costs little and removes that narrative. Ignoring is a decision; make it deliberately or not at all.

When to bring in a litigator

When stopping the conduct would hurt the business, when the letter concerns trade secrets or a non-compete, when an injunction is threatened, or when you are considering filing first. In each of those the next move sets the shape of a possible case, and the response letter will be read in a courtroom. Tina Wysk represents Dallas businesses that receive cease and desist letters, from the initial assessment of the sender's claim through any injunction proceeding that follows.