Bold Update! The Pros and Cons of a Cease and Desist

A Cease and Desist, or a Patent Notice, letter can take on many different tones and contain a variety of different information for the recipient. To level set, these types of notices are typically sent from a party who has made claim to owning a patent right either through assignment or simple ownership of one or more patents granted from the USPTO. The letters are sent to potential or alleged infringers of the patent. Patent attorneys are trained in the art of crafting these sorts of letters for their clients who hold patent rights. A patent owner is wise to consult an attorney to help them strategize the type and timing of the communication to the alleged infringer right from the very first interaction and try to set the course for reaching the client’s goals. 

The client’s goals range widely from seeking a royalty on the products or services sold in the marketplace, to more aggressive measures including injunctive relief, retroactive payment, and customs/border action. On the one side, licensing usually means allowing the infringer to continue doing what they are doing (likely selling the product or service) but taking a percentage of the profit (for example) and sending that to the patent holder who would be allowing the infringer to make, use, or sell their patented technology. On the other side, a more aggressive action takes a lot of careful preparation to assure the patent owner’s patent claims would hold up in court, being certain that the infringer is practicing what is claimed in the patent among others. This preparation is needed in order to prepare for a response, which can be just as aggressive.

So, what are the pros and cons of sending a Patent Notice letter?

Pros:

• Notice: Puts the infringing party on notice! The notice is kind of obvious, but it helps courts understand definitively when one of the parties were made aware of the situation.
• Big Damages: If the alleged infringer continues the infringing activity after receiving notice – this could be BIG trouble for them if they are found liable. This is called “willful infringement”.
• Settlement: The letter could surprise the other party who may be innocently infringing. The other party may then be scared of litigation (rightfully so) and decide to settle with the patent owner – this is the best situation for all involved. Lower cost, quick resolution, and no one gets hurt.

Cons:

• First Move: The alleged infringer could try to beat you to the court after receiving the letter. Often times this is through a “declaratory judgment” (DJ) motion. This DJ action could result in a ruling in favor of the alleged infringer and they may have a leg up on your because they made the first move
• Venue: Along with bringing the DJ action is the ability to force the patent owner to the alleged infringer’s turf! This could mean having to fly across the country to defend a DJ action.
• Post-Grant Actions: The alleged infringer could “stay” or put on hold a court action by filing an Inter Partes Review (IPR) or Post Grant Review (PGR) on the patent owner’s patent – seeking to have the USPTO re-evaluate the patent claims. This could mean having to go defend the patent first, before making any headway on the civil front.

Author: J.D. Houvener, Founding Patent Attorney