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The mechanics of ethical and effective cease and desist letters

Cease and desist letters can be categorized into three types:

  1. The Furious Demand;

  2. The Softball; and

  3. The Intellectual.

Attorneys that send the Furious Demand type of letter want to look "tough" to the opposing party.
Attitude is everything in the Furious
Demand
cease and desist letter

The Furious Demand

The Furious Demand is all too common in intellectual property litigation.  The undersigned attorney is seemingly outraged that the alleged infringer is still breathing.  The Furious Demand is heavy on threats but light on facts.  All infringement is egregious, knowing and malicious.  The letter will invariably demand:

  • An immediate halt to all business operations involving the alleged infringement;

  • Immediate destruction of the allegedly offending articles or equipment in support of the infringement;

  • The identity of all customers that bought the infringing article;

  • The total number of infringing articles sold;

  • Advise of the profit margin for each article and the total profits made; and

  • An opportunity to admit infringement and grovel for a settlement.

The Furious Demand is adept at instilling fear in the mind of the layperson.  The wrath of enormous penalties, much less the thought of a costly litigation often sends businesses into conniptions.  More often than not, the Furious Demand is a smoke screen for a poorly investigated and/or weak theory of infringement.  As Shakespeare would say, "methinks thou doest protest too much."  Such drum-beating is usually interpreted by well-informed patent litigators as the sign of inexperience or incompetence. 

Pros and Cons of the Furious Demand

PRO

CON

  • The alleged infringer may be sufficiently intimidated to stop the alleged infringement.
  • It takes very little time to draft - no real analysis exists in the Furious Demand.
  • The communication does serve as a call to action and will typically receive some form of response, whether positive or negative.
  • The defendant may call the bluff and file for a declaratory judgment of non-infringement, effectively becoming the plaintiff in the venue of their preference.
  • The letter may support Rule 11 sanctions if the subsequent litigation is deemed frivolous, legally unreasonable, without factual foundation or asserted for an improper purpose.
  • The sender's credibility is damaged and potential licensing discussions are far from an amicable start.
  • The tone of the letter can cast the patent owner in a negative light during trial.

Attorneys that send the Softball type of letter want to look reasonable and cordial to the opposing party.
Sending a Softball Demand has its advantages, one of which is maintaining an amicable relationship with the opposing side.

The Softball Demand

The Softball Demand is almost the antithesis of the Furious Demand.  Like the Furious Demand, the Softball Demand is light on facts.  However, the Softball Demand is non-threatening and amicable. A typical Softball Demand might read as follows:

Dear Mr. Jones:

We are intellectual property counsel for XYZ corporation.  It has come to our attention that your ABC-brand widget has several features that appear to be claimed by our client's patent (enclosed).  Our client has advised us that XYZ corporation enjoys a long-standing reputation in the industry as a reputable and conscientious business.  Thus, we presume XYZ corporation was unaware of the existence of our client's patent.  However, we believed it prudent for XYZ corporation to be aware of the patent as soon as we learned of this situation.  From a preliminary review, we are inclined to believe the ABC-brand widget reads on the patent claims.  However, we would appreciate your thoughts on this matter.  Please feel free to contact us at your convenience, we look forward to hearing from you.

Best regards.....

 

The purpose of the Softball Demand is to put the opposing party on actual notice of the patent.  From a damages standpoint, continued manufacture, use, sale, offering for sale or importing of the ABC-brand widget will now be knowing and willful.  Also note that the word infringement was not used once in the communication.  Instead, we simply noted that the ABC-brand widget might read on the claims of the patent (same thing as infringement).  The idea is to not intimidate the opposing side. 

Some defendants become blissfully unaware that the Softball Demand letter they received was simply sent to enhance potential damages and not for any desire to maintain a friendly atmosphere.  However, there is a fine line between notice and acquiescence.  The letter must not convey any notion that the alleged infringement is permissible.  Otherwise a legal theory called estoppel may severely cripple the patent owner's case.

Pros and Cons of the Softball Demand

PRO

CON

  • If a license will be offered for the patent, the patent owner has maintained a friendly and understated tone to the situation.
  • It takes very little time to draft - no real analysis exists in the Softball Demand.  The burden of analysis is laid on the alleged infringer.
  • The communication would rarely induce another side to file a complaint for declaratory judgment of non-infringement.  However, the alleged infringer is put on actual notice of the patent and enhanced damages may be calculated from the date of the communication if not earlier.
  • The tone of the letter would tend to cast the patent owner in a positive light before a jury.
  • The laid-back nature of the communication may result in no action taken.  If ongoing and substantial damage is suffered by the patent owner, then a more aggressive approach should be considered.
  • A sloppily drafted Softball Demand may be interpreted as giving permission to practice the patented invention.
  • The patent owner may be perceived as ambivalent and thus, not taken seriously.

The Intellectual Demand

This type of demand requires the greatest amount of work, but generally produces the best results.  The Intellectual Demand represents a knowledgeable and even-handed manner of handling infringement issues.  Where the Furious Demand is fanatical, the Intellectual Demand is reasonable.  Where the Softball Demand dances around the real purpose of the communication, the Intellectual Demand is unambiguous.  The Intellectual Demand has several features:

  • A claim chart is a two-column table in every legitimate patent infringement analysis.  In the left column are each and every limitation of the patented invention.  In the right column is either a "yes" or "no" answer as to whether that limitation is present in the accused device or method.  For example, an accused device and a claim chart are presented below:

Bucket with handle and cushioning means - patent infringement example
The accused device #1 (a bucket)

Infringement Claim Chart

Claim Limitation Present in Accused Device?
(Claim 1) A bucket for holding fluid, the bucket comprising:  
a bucket Yes
a handle from which said bucket depends; and Yes
a cushioning means attached to said handle. Yes

For infringement to exist, each and every limitation in the patent claim must be present in the accused device.  Of course, a defendant may argue that the wooden handle in accused device #1 above does not have "cushioning" properties.  Semantics and the use of precise language play a big part in patent quality and enforcement. 

  • Clear notice of infringement is present in the Intellectual Demand.  The letter pulls no punches because the facts and analysis are laid out clearly. 

  • Reasonable demands are made in the communication.  Typically, they indicate that the accused product must be phased out and/or a reasonable royalty paid for those sold in the past and/or future. 

  • An amicable tone carries through the Intellectual Demand.  There is little need for bluffing or animosity when the facts are clearly on the side of the patent owner. 

  • A reasonable time frame for investigation is given to the other side.  The patent attorney for the accused infringer will order the "file wrapper" for the patent.  The "file wrapper" or "prosecution history" are documents sent back and forth between the patent owner and the U.S. Patent & Trademark Office during the application stage.  Quite often, the file wrapper will disclose concessions made by the patent applicant in order to get his or her patent.  Such concessions may limit the scope or coverage of the patent.  In the example above, the patent owner may have argued to the patent examiner that "cushioning means" was limited to resilient, elastomeric materials.  Thus, the patent owner could not claim that a cushioning means made of wood (as shown in accused device #1) infringes on the patent since that was relinquished during the application stage.  Such a narrowing of scope is called "prosecution history estoppel."  A true Intellectual Demand would have taken prosecution history estoppel into account.  Nevertheless, the sender appreciates the need of opposing counsel to come to his or her own conclusion on the matter.




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