Cease and Desist Letters: When a Business Should Send One

Cease and desist versus demand letter

A demand letter asks for money or performance. A cease and desist letter asks for conduct to stop: using a trademark, soliciting your customers in breach of a non-compete, using files a former employee took, publishing false statements, interfering with your contracts. The two overlap, and many letters do both, but the decision to send a cease and desist turns on different questions, because the harm is ongoing and the remedy, if the letter fails, is usually an injunction rather than a judgment for a sum.

Like a demand letter, a cease and desist letter is a private communication with no legal force of its own. Nobody is obliged to obey it. Its power comes from what it signals and from what it sets up.

What a cease and desist letter actually accomplishes

• Notice. After the letter, the recipient cannot claim they did not know. In trademark and trade secret cases, continued conduct after notice supports a finding of willfulness, which can affect damages and fee awards. In a non-compete case it removes the "nobody told me" defense.
• A preservation trigger. Texas law requires a party to preserve relevant evidence once litigation is reasonably anticipated. A cease and desist letter is clear proof of that moment, so later deletion of files, messages or accounts can be sanctioned.
• A record for the injunction hearing. If you later ask a court for a temporary injunction, the judge will want to know whether you tried to resolve the matter first. A measured letter and an unreasonable refusal help.
• A result. Many recipients stop. A former employee who took a customer list, or a small competitor using a similar name, often has more to lose from a lawsuit than from compliance.

Situations where a letter is usually the right first move

Trademark and trade name. Another business has adopted a name, logo or domain close to yours. A letter identifying your mark, your prior use or registration, and the confusion you have seen is the standard opening, and many disputes end there. The basics are covered in what to do when someone is using a name like yours.

Non-compete and non-solicitation. A former employee has joined a competitor and is contacting your customers. A letter to the employee, and often to the new employer, quoting the covenant and identifying the conduct puts both on notice and frequently produces a negotiated standstill.

Contract interference. A competitor is inducing your customers or suppliers to break their agreements with you. A letter identifying the contracts and the conduct establishes the knowledge element of tortious interference going forward.

Defamation and disparagement, in the right case. A former employee, customer or competitor is publishing statements about your business that are false and factual, not opinion. A letter identifying the statements, stating why they are false and asking for retraction is often appropriate. The caution below applies.

Situations where a letter can backfire

The warning lets them finish

If a departing employee has your customer database on a personal drive and is about to use it, a letter gives them time to copy it elsewhere, use it, or delete the evidence of having had it. The same applies to a partner about to transfer company assets or a competitor about to launch. In those cases the remedy is a temporary restraining order, and the letter follows the court order rather than preceding it. The threshold for stopping misuse before it happens is covered in whether you can stop a former employee before they use your trade secrets.

The recipient files first

A cease and desist letter that threatens suit can prompt the recipient to file a declaratory judgment action asking a court to rule that they are not infringing, not bound by the covenant or not liable. In trademark cases this is common and the recipient will file in their home court. If forum matters, consider filing first or writing the letter so that it does not create an immediate, concrete threat of litigation.

Speech, and the Texas anti-SLAPP statute

When the conduct you want stopped is speech, including online reviews, social media posts or statements to customers, the Texas Citizens Participation Act, Civil Practice and Remedies Code chapter 27, changes the calculation. If you sue over a communication made in connection with a matter of public concern, the defendant can file a motion to dismiss within 60 days of service. Discovery is suspended, and unless you establish by clear and specific evidence a prima facie case for each element of your claim, the court must dismiss it and must award the defendant court costs and reasonable attorney's fees, and may add sanctions.

A cease and desist letter about speech is therefore a letter you must be able to back up with a claim that survives the TCPA. False statements of fact about a business can be actionable; opinions, reviews that describe a real experience and statements the recipient can prove are not. A letter demanding that true or opinion-based statements be removed invites the recipient to publish the letter and dare you to sue. The defamation angle is explored further in what to do when a former employee is disparaging your company online.

The letter overreaches

A letter that demands more than the law allows, that threatens criminal prosecution or regulatory complaints to force compliance, or that is sent to the recipient's customers and employers to pressure them, can create claims against the sender. Texas has no stand-alone extortion offense, but under Texas Penal Code § 31.01 and § 31.03 consent to a transfer of property induced by coercion is not effective consent, which is how improper threats to obtain money are treated as theft. A letter copied to third parties can also be tortious interference or defamation in its own right. Where the line sits is examined in whether a demand letter can be defamation or extortion.

Example

Suppose a Dallas commercial cleaning company learns that a former account manager, bound by a one-year customer non-solicitation covenant, has joined a competitor and that two customers have received her calls. The covenant is in a signed agreement supported by confidential pricing she received. Nothing suggests she has taken files. A cease and desist letter to her and to the new employer, quoting the covenant, naming the two customers and asking for written confirmation within seven days that solicitation will stop, is the right first move: the conduct is clear, the right is documented, and the company is prepared to seek a temporary injunction if the calls continue. Now suppose instead that the company discovers she downloaded the full customer database the night before she resigned. The letter would give her time to copy or destroy it. The company files for a temporary restraining order first and serves the letter with the order.

What the letter should contain

1. Who you are and what right you hold: the mark and registration, the contract and clause, the trade secret in general terms, the contract being interfered with.
2. The specific conduct, with dates, examples and, where possible, screenshots or copies attached.
3. Why the conduct violates the right, in a sentence or two of plain English.
4. Exactly what must stop, and by when, and what affirmative steps you want: written confirmation, return of materials, a retraction, a corrective notice.
5. A preservation demand covering documents, devices and accounts relating to the conduct.
6. What you will do if the conduct continues, stated only if true.
7. A reservation of rights, including damages for conduct to date.

Two pages at most. No adjectives about the recipient. Nothing you would not want a judge to read aloud.

Who should send it

A business owner can send a cease and desist letter, and in a small dispute with a cooperative counterpart that may be enough. A letter on a law firm's letterhead signals that the claim has been evaluated and that an injunction is a real possibility, and in trademark, trade secret and non-compete matters the recipient's first move is usually to send the letter to their own lawyer, who will take a lawyer's letter more seriously. The choice is weighed in whether a letter from a lawyer carries more weight. Tina Wysk sends cease and desist letters for Dallas businesses in trade secret, trademark, non-compete and interference matters, with the injunction application already drafted when the facts call for it.