Key Takeaways

  • A patent infringement cease and desist letter serves as a formal notice to an alleged infringer, often aiming to open negotiations or warn before litigation.
  • Such letters should be drafted carefully to avoid triggering unintended legal consequences like declaratory judgment actions.
  • Recipients should promptly assess the validity and scope of the allegations, preferably with the help of a patent attorney.
  • Sending a letter in bad faith can expose the sender to legal penalties or FTC actions.
  • Strategies like pre-suit negotiations, licensing discussions, or a well-prepared defense plan are critical after a letter is received.

Patent Infringement Prelitigation Letter

A patent infringement letter, also called a cease and desist letter, is sent by a patent owner to a person or business believed to be infringing on the intellectual property (IP) in question. Many patent owners decide to sue the alleged infringer rather than sending a prelitigation letter. This is because in some cases, the recipient of the letter responds by countersuing the patent owner in his or her chosen venue for declaratory judgment. 

Patent owners prefer to litigate in districts that tend to protect intellectual property, including the Eastern District of Texas and the District of Delaware. Sending the notice letter gives the infringer a chance to file first in a less preferred venue. 

However, sending a patent infringement letter has the benefit of establishing a date for damages to begin. This is not necessary if the product is marked with a patent number and date. Another option is to file a suit without first notifying the alleged infringer.

What Is a Patent Demand Letter?

Any communication a patent owner sends to an alleged infringer before filing a lawsuit can be considered a demand letter. However, a demand letter can be sent for many legitimate reasons. Some examples include:

  • An inquiry letter without the intention of litigation to determine whether a product includes the patent in question.
  • An offer of licensing for the purpose of starting negotiations. This may result in litigation if favorable licensing terms are not met.
  • A cease and desist letter demanding either discontinuation of using the patent or royalty payment.

All these demand letters are important tools for patent owners who need to protect their intellectual property. They allow for an agreement to be reached without a lawsuit.

Sending Demand Letters Under Bad Faith

Sending multiple patent demand letters to users and small business owners with no intention of filing a lawsuit is considered harmful. That's because those who receive letters sent in this matter may be unfamiliar with patent law and without the resources to defend themselves in court. As a result, they may agree to pay a licensing fee or settlement even when not actually guilty of infringement.

This practice, known as sending demand letters in bad faith, is under attack through multiple legal channels. Legislative proposals currently in Congress require specific information to be included in a demand letter for it to prove willful infringement. They may also require the Federal Trade Commission (FTC) to consider bad faith demand letters a deceptive trade practice.

In 2014, a company known as MPHJ Technology Investments LLC had to settle with the FTC over claims that they sent abusive patent demand letters to thousands of small business owners. The claims included fake legal threats and deceptive sales claims. State attorney generals are pursuing abusive patent litigators at the state level. In addition, more than 18 states have attempted to end this practice legally with consumer protection laws.

Receiving a Patent Demand Letter

Although these state laws are designed to prevent abuse of patent demand letters, they have created some confusion about obligations and liability. If you receive a letter from a competitor accusing you of patent infringement, consult a patent attorney. Do not ignore a patent litigation infringement letter, as doing so can be quite costly in the long term.

A response to this type of letter must be crafted strategically, with consideration of factors that include:

  • Whether the patent owner has sued others previously for infringement.
  • Whether you have a commercial relationship with the patent owner who sent the letter.
  • How profitable, successful, and popular the patent in question is expected to be.
  • How strong the infringement allegations are against you.
  • What demands are included in the letter.

Defense Strategies Against a Patent Infringement Cease and Desist Letter

Recipients of a patent infringement cease and desist letter can explore several defense strategies, including:

  • Negotiation and licensing: Initiating discussions for a license agreement to avoid litigation.
  • Design-around solutions: Modifying the product or process to avoid infringing claims.
  • Challenging the patent’s validity: Asserting that the patent is invalid based on prior art or lack of novelty.
  • Seeking a declaratory judgment: Proactively filing in a favorable court to establish non-infringement or invalidity.

Quick, informed action can often transform a threatening situation into a manageable legal or business resolution.

How to Evaluate the Claims in a Cease and Desist Letter

Upon receiving a patent infringement cease and desist letter, take the following steps:

  • Examine the patent: Review the patent claims, filing dates, and ownership status to verify legitimacy.
  • Assess product overlap: Compare the accused product or process with the patent claims to determine if infringement is plausible.
  • Check prior art: Determine if the patent may be invalid due to prior disclosures or obviousness.
  • Analyze market impact: Evaluate how important the accused feature is to your business and what costs are at stake.

These assessments should ideally be conducted with the guidance of a patent attorney to craft an informed response strategy.

Reasons to Send a Patent Infringement Letter

Most courts look favorably upon the practice of sending a cease and desist letter to the alleged infringer before filing a lawsuit. Although suing first gives you the benefit of choosing your venue, the jury may show sympathy to the infringer if you jump straight to court without attempting to negotiate. Due to the recent onslaught of patent litigation in the United States, some consider the plaintiffs in these cases as attempting to exhort small business owners and individuals. 

Best Practices for Drafting a Patent Infringement Cease and Desist Letter

To maximize effectiveness and reduce risk, follow these best practices when drafting a cease and desist letter:

  • Clearly identify the patent(s) and specific claims believed to be infringed.
  • Specify the allegedly infringing activities or products.
  • Avoid overly aggressive language or unsubstantiated threats.
  • State the desired outcome (e.g., cessation, licensing, settlement).
  • Provide a reasonable response deadline.
  • Ensure the letter is reviewed by legal counsel to comply with fair practices and minimize exposure to bad faith claims.

Proper drafting increases the chances of achieving a favorable resolution without unnecessary litigation.

Strategic Considerations Before Sending a Cease and Desist Letter

Sending a patent infringement cease and desist letter can be a double-edged sword. While it puts the alleged infringer on notice, it also risks triggering a declaratory judgment lawsuit in a less favorable venue. Before sending, patent owners should consider:

  • The jurisdictional risks, as the recipient may file a preemptive suit seeking a declaration of non-infringement.
  • The tone and content of the letter—aggressive language may escalate conflict, while a more neutral tone may preserve the chance for negotiation.
  • Legal exposure, as false or bad faith assertions can lead to counterclaims or FTC action, particularly if the sender engages in deceptive practices.

A carefully worded letter, reviewed by experienced counsel, can balance the need to enforce rights with minimizing legal risks.

Frequently Asked Questions

  1. What is the purpose of a patent infringement cease and desist letter?
    It notifies an alleged infringer of a claimed patent violation and typically seeks to stop the infringement or open negotiations before legal action.
  2. Can sending a cease and desist letter backfire?
    Yes. It can trigger a declaratory judgment lawsuit, potentially placing the patent owner in an unfavorable legal venue.
  3. What should I do if I receive a patent infringement cease and desist letter?
    Promptly consult a patent attorney to evaluate the claims, assess your risks, and determine the best response strategy.
  4. How should a cease and desist letter be written?
    It should be factual, clear, non-threatening, and focused on encouraging resolution, while being reviewed by legal counsel to avoid claims of bad faith.
  5. Can I ignore a patent infringement cease and desist letter?
    Ignoring it is risky, as it may lead to costly litigation. A strategic, timely response is always recommended.

If you need help with a patent infringement letter, you can post your job on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.