Posts Tagged ‘C&D’

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I’ve written previously on using the virtues of judo when responding to a cease and desist without going overboard. What about when you’re faced with someone infringing or diluting your trademark? What options are there, other than the C&D?

Understandably, many trademark owners, after the initial rage subsides, will call up their brother’s ex-girlfriend’s cousin who once knew a lawyer in Omaha and have them write a nasty C&D and “see what happens”. That might work. It is certainly cheaper on the front end. Or is it? Whether to send a C&D is not a simple question.

For many product and service providers (i.e. businesses), their brand is their stock in trade. Without trademark protection, their brand may as well be your competitor’s brand. I’m fond of saying that only McDonald’s could serve billions of crappy burgers in every corner of the globe. John Doe’s Burgers could never pull that off. It’s all in the brand. Infringers are taking shortcuts, cheating, and basically capturing your goodwill, as embodied in trademarks, which are worth fighting over. The question is whether a fight is necessary, and if so, how and when should you start the fight.

Most trademark owners know, at a gut level, that an infringer must be stopped, or at least put on notice that they are infringing. Failure to do so causes the trademark to lose its integrity and legal protections. C&Ds are cheap, and especially for small businesses and startups, are a cost-effective way to enforce their rights.

A C&D is not unlike most demand letters. The trademark owner states that she owns certain rights, the recipient is infringing on said rights, such infringement creates certain causes of action for damages and injunctive relief (e.g. trademark infringement, unfair competition, cybersquatting or dilution under federal and state laws); and litigation may ensue if the infringement does not cease.

You are well advised to consider a C&D prior to litigation, for obvious reasons. Litigation is expensive, time-consuming, stressful, and uncertain. On top of that, if you sue without first making demand to cease, the judge may believe you are being a hasty litigant.

However, sending a C&D can have unforeseen consequences. Your competitor could read your letter and decide that rather than bothering with negotiation or waiting to be sued by you, it should take the offensive and sue first. A suit in federal court for declaratory relief — basically a court order stopping you from infringing on the infringer, could ensue.

In a declaratory judgment lawsuit, the alleged infringer would ask the court to “declare” that it is not infringing your rights. They might ask the judge to hold that your trademark is unenforceable. Now you’re on the defensive — though you can, and maybe should, counter sue.

There are advantages to suing first. You can pick the most favorable venue for your case, probably your home turf. This advantage is greater if your adversary is far away, or if they have a smaller war chest with which to litigate. Of course, the other party can move to transfer the case, but then you’re already behind the eight ball.

Additionally, dispensing with the customary C&D and suing on your home turf, while possibly more costly at first, certainly sends a stronger message. Your adversary might be unable or unwilling to defend a lawsuit.

A third option might be to send a different sort of letter. Rather than demanding that the infringer cease and desist and accusing them of infringement, you might simply inquire as to their use of the mark and make clear your intent to resolve the matter amicably. Before sending any letter, be sure that you have higher priority rights to the trademark. Nothing is worse than sending a C&D full of bravado, then learning that your competitor has better rights to the mark. Do your homework. If it turns out that the would-be infringer has better rights, sending out the first C&D could foreclose defenses that the marks do not overlap.

So, next time you spot a potential infringer, think hard before sending a C&D. You have options, so use them.

Aaron Thalwitzer is an attorney with Zies Widerman & Malek practicing civil litigation and intellectual property law in Melbourne, Brevard County, Florida.

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Gravatar Iconby Mark Malek

As our readers know, we here at TacticalIP like to point out the times in which intellectual property has been used in an inappropriate matter, i.e., when intellectual property owners get a little too overzealous in enforcing their rights.  We have previously posted a series of articles on IP Bullies (see our articles here, here, here and here).  Of course, there is the infamous case of The North Face v. The South Butt.  This could be one of my all time favorite IP Bully cases gone wrong.  The case has settled now, but what a disaster it turned out to be, in my opinion, for The North Face, and what a success it turned out to be for The South Butt.  Some more information on this case is available here.

Commerce Secretary Gary Locke

According to an article that I recently read, part of the Trademark Technical and Conforming Amendment Act of 2010, passed earlier this year, directs the Secretary of Commerce to study and report “the extent to which small businesses may be harmed by litigation tactics attempting to enforce trademark rights beyond a reasonable interpretation of the scope of the rights granted to the trademark owner.”  So it turns out that a bunch of Congressman have received some complaints from their constituents that big bad businesses are bullying them into not using their trademarks, and now Congress wants to conduct a study of the effect of such tactics.  Please join me in asking the following – are you kidding me???

I personally do not think that in these economic times, Congress should be directing funds to such a study.  I know that those who disagree with me argue that this is precisely the time to spend money on such a study.  They are arguing that if bullying litigation tactics are being used to shut down small businesses, it is damaging an already weak economy.  Good argument, and one that I do not necessarily disagree with.

It is my opinion, however, that the study should be refocused.  I believe that a study should be conducted as to the rise in infringing activity – especially with respect to trademarks.  Is the infringing activity linked to anything?  I suspect (and this is from my own personal experience in my practice and observing the cases that are coming through the door now) that such a study will indicate that there are several people out there that are trying to make a quick buck on the back of someone else’s intellectual property.  Here at Zies Widerman & Malek we have seen a significant rise over the past year in intellectual property owners having their intellectual property improperly used by others in ways that can only be described as blatant infringement.  Sometimes I struggle to believe that these cases do not immediately end after a cease and desist letter is sent out.  I believe that the desire to fight, however, may come from some attorneys out there that may also be struggling and looking to also make a quick buck.  Inevitably, most of these cases have settled, but not after the potential infringer paid an attorney several thousands of dollars.

Back to the study that Congress has requested.  There may be some validity to it, but I believe that the request of the Secretary of Commerce is overly broad, and if the study is conducted in the manner that Congress has set out, those carrying out the study will likely be spinning their wheels.  The study will likely show that, in cases where there truly is some IP Bullying going on, the situation is devastating to the small business.  I’m sure that I am not setting forth a theory that is ground breaking.  For the study to be meaningful, however, I believe it needs to include an entire section dedicated to a study of the economic times and the rise in intellectual property litigation.

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