Responding to Trademark Infringement Cease and Desist Letters: Strategies & Considerations
This post lives on the other side of the coin from my prior blog post entitled “On Trademark Cease and Desist Letters: Strategies & Considerations.” Responding to a trademark cease and desist letter is an art form. The nature of, and strategy behind, the response will vary depending on the facts and circumstances. Here are some guideposts to help you get it right.
Keep the Purpose of the Response in Mind
When you receive a cease and desist letter, you essentially have two options: (1) you can ignore the letter or (2) you can respond. If you choose to respond, the purpose of responding will depend on whether you have priority of rights or not.
Although somewhat infrequent, sometimes a careless trademark owner will send a cease and desist letter to a party who has actually been using its mark longer than the trademark owner. If a trademark owner has sent a cease and desist letter to a recipient who has prior rights, then that trademark owner did not adhere to the first rule of trademark cease and desist letters. I’ve had it happen before and written about it here on Trademark Well. If this happens, your response essentially turns the table and becomes a cease and desist letter to the other side with the added bonus that the other side has essentially admitted likelihood of confusion by virtue of its initial cease and desist letter.
But most of the time you won’t be so lucky. Most of the time, the sender will have conducted some modicum of due diligence to satisfy itself of priority. So assuming that you find yourself in this position, the purpose of the response is to get the trademark owner with prior rights to leave you alone. In other words, to make sure the sender doesn’t sue you in federal court for trademark infringement or initiate a Trademark Trial and Appeal Board (“TTAB”) opposition or cancellation proceeding. In order to persuade the sender to refrain from taking further action, the response needs to provide the sender with compelling reasons to walk away.
Yet, most responses to trademark cease and desist letters fail to do just that. They are either mere conclusory disagreements with the alleged infringement or reused form response letters. Or worse, the response exposes the recipient and/or the recipient’s counsel’s lack of understanding and familiarity with trademark law (e.g., I’ve received a response denying infringement because the recipient claimed its mark had secondary meaning).
An effective response, on the other hand, will exhibit a command of trademark law while exposing the legal weaknesses of the sender’s trademark infringement claim. Pulling this off requires a thoroughness lacking in most responses. By taking this approach, the recipient also communicates that it will not be intimidated and any ensuing litigation will be contentious should the sender decide to proceed with its allegations of infringement.
Assessing and Responding to the Allegation of Trademark Infringement
As you probably know, trademark infringement requires two elements: (1) prior rights in a valid, protectable mark, and (2) a likelihood of confusion. There’s a lot to unpack within these two elements, which means there’s a lot of potential points that can be explored for a response letter.
Begin with Priority
There are not many bright lines in trademark law. In many cases, parties can make reasonable arguments about whether a mark is descriptive, whether marks are similar enough, whether a weighing of all the factors results in a likelihood of confusion, etc. And while there can also be disagreement about priority, priority is usually more of a black and white inquiry compared to the other legal aspects of an infringement claim. That’s why I like to begin there.
All trademark cease and desist letters allege priority, but very few provide any evidence substantiating the allegation. So one of the very first things I do in the response is ask the sender to provide competent evidence substantiating its date of first use and claim of priority. The sender really should have no problem providing this evidence because, if it initiates a federal lawsuit or TTAB proceeding, it will have to provide this evidence anyway.
It’s important to know the facts and evidence upon which the trademark owner is relying for priority. Sometimes the sender clearly has priority and has the evidence to prove it. But other times, you’ll discover that the sender is relying on non-trademark use to try to claim priority, such as the registration of a domain name or the formation of a company.
Other Issues Relating to Ownership of a Valid, Protectable Mark
It’s difficult to cover every permutation of arguments and issues that can be raised in response to a cease and desist letter—that is simply too fact dependent. But consider any other aspects of this element that you may want to raise or ask about: (i) did the sender acquire the trademark from another party or is the sender just a licensee?, (ii) if the mark is descriptive, asking for evidence of acquired distinctiveness, (iii) if there was a period of non-use, exploring the issue of abandonment, and (iv) is the mark being used lawfully? If the sender has a registration, assess the scope of the rights: (i) is the registration on the Principal or Supplemental Register?, (ii) does the registration disclaim any terms, (iii) is the registration for a word mark or design mark?, (iv) is the mark in the registration the same as the one used by the sender in the marketplace?, and (v) are the goods or services in the registration the same ones at issue in the dispute? These are just some examples of other issues that might be applicable in some situations.
Explore the Likelihood of Confusion Factors
I’ve gone over the different likelihood of confusion tests used in different circuits. Determine which one will apply to your dispute and decide which factors are worth raising in response to the cease and desist letter. You can use the factors to both argue that there is no likelihood of confusion, as well as to fish for information to assess the sender’s claims. For example, if the parties have been co-existed for a reasonable period of time, you could point out that there have been no instances of actual confusion, which, in turn, evidences a lack of a likelihood of confusion. But you could simultaneously use that opportunity to offer to re-evaluate your assessment if the sender can provide information and evidence regarding any instances of actual confusion.
Research the Trademark Owner and Its Trademarks
I’ve written about researching the trademark owner before in a couple of different contexts, such as when performing a comprehensive trademark search or when you’re sending a cease and desist letter. Likewise, when you’re on the receiving end of a cease and desist letter, you should research the sender too.
One of the first things I want to know is how litigious the trademark owner is. So I jump on PACER and perform a search listing the trademark owner in the “Party Name” box and “840 Trademark” in the Nature of Suit box. Since there are so few trademark infringement cases filed in state court, the results from this search will tell me whether the sender has ever actually pulled the trigger on a federal trademark infringement lawsuit and, if so, how often. My next search is a search to see if the trademark owner has initiated any trademark oppositions or cancellations before the Trademark Trial and Appeal Board. To do this, I simply perform a party search on the Trademark Trial and Appeal Board Inquiry System (TTABVUE). Having completed these two searches, I will have a good idea of the sender’s history (or lack thereof) with trademark litigation. If I find little to no results of the sender having been involved in trademark litigation, I might then broaden my search to litigation generally.
Obviously, upon receiving a cease and desist letter, I would review and analyze the trademark that the sender claims is being infringed. But I will usually also take a look at what other trademarks the sender owns. If the sender owns too many marks to review, I’ll just take a look at the trademark at issue and any other similar marks (e.g., marks incorporating the same term).
I take a look at the fie history for each mark, looking for any statements made by the trademark owner during prosecution that may now cut against its claim of infringement. For example, you can sometimes uncover arguments made by the trademark owner that there is no confusion between its mark and a mark similar to the recipient’s mark or even co-existence agreements having been entered and submitted to the USPTO. These nuggets should be incorporated into your response and may provide a basis for a prosecution estoppel argument or constitute admissions against interest.
Trademark Owner’s Website, Goods, and Services
In its cease and desist letter, the trademark owner will make certain statements about its business, industry, products and services, trade channels, and so on. None of these statements should be taken at face value. Trademark owners have a tendency to over exaggerate or mischaracterize to try to sell the existence of a likelihood of confusion. This tendency warrants a bit of research.
Spend time researching the trademark owner – even if it’s just the trademark owner’s website and a few articles on the Internet. Try to get a sense of whether there is a disconnect between the marketplace realities and the trademark owner’s descriptions. Does the trademark owner really provide the goods and services described in its letter or listed in its trademark registration?
Researching the Marketplace and Identifying Third Parties and Possibly Contacting Them
One thing I always research is the extent of other identical or highly similar trademarks being used in the marketplace (i.e., whether there is a crowded field). I’ve written about crowded fields before and the importance of the argument when available. If there are a lot of similar marks in the marketplace, I’ll make a crowded field argument in response to the cease and desist letter. In fact, if my research reveals similar marks that the sender would likely have sent cease and desist letters about, I will sometimes consider contacting those third parties. This can provide insight as to how to deal with the sender and potential bases for resolution (and if appropriate, can be worth mentioning in the response letter). Just make sure that, if you do decide to contact a third party, that your client is not infringing that third party’s rights. You don’t want your client receiving another cease and desist letter.
(Along these same lines, if your research has revealed that the sender has initiated lawsuits or TTAB proceedings against other parties, it may be worth contacting the defendants in those other actions.)
Use the Response as an Opportunity to Support Equitable Defenses
Receiving a cease and desist letter from a trademark owner is an opportunity to start the clock running on equitable defenses. I wrote about this before in the context of sending a cease and desist letter.
Accordingly, by responding, the recipient will have written evidence that it actually received the cease and desist letter. In addition, the recipient can add language to the response letter with an eye towards supporting such equitable defenses years down the road should the sender delay filing suit. For example, this could include language emphasizing that the recipient will assume that the matter is resolved if it does not hear otherwise from the sender and that the recipient will rely on the absence of further communications in continuing to use its mark. While such tactics do not provide bullet-proof equitable defenses (equitable defenses are always too sketchy to rely upon), they provide additional evidence and arguments that can be used to bolster such equitable defenses.
The Nuclear Option: DJ Baby
No client is dying for a lawsuit. But we are listing all options, right? And this is an option that should be discussed with the recipient.
As an initial matter, you’ll have to assess whether the cease and desist letter satisfies the actual case or controversy requirement for filing a declaratory judgment (“DJ”) action in the first place. If so, you’ll also want to assess whether it has any impact on personal jurisdiction and choice of venue.
Assuming filing a DJ is an option, there are real benefits. First, it can prevent the allegation of trademark infringement from hanging over the head of the recipient indefinitely. With this unresolved allegation hovering like a dark cloud, the recipient is put in the uncomfortable position of deciding whether to transition to a new trademark or continue to use and invest in the allegedly infringing trademark while simultaneously increasing the potential damages that the sender could recover at a later time. Having the matter actually resolved has significant value—even if it requires the recipient to put the legal wheels in motion.
Second, if the sender is bluffing, filing a DJ calls the sender’s bluff. Figure that at least half of the trademark owners sending cease and desist letters have no actual intention to file a lawsuit to protect their rights. By calling the sender’s bluff, the recipient now has leverage and can use that leverage to resolve the dispute on very favorable terms (e.g., a simple co-existence agreement).
Third, if the sender is not bluffing, then the recipient is going to find itself in a lawsuit anyway. The recipient might seize the benefits that come with filing first, such as choosing the venue for the litigation and the gaining the psychological and perceptive advantages that come with being a plaintiff.
Make Settlement Offers Under Separate Cover
Just as I recommend not including settlement offers in cease and desist letters, I also recommend not including settlement offers in response letters. To me, it undercuts the entire response. After a two page tirade on why the recipient is not committing trademark infringement, it’s almost laughable to then end the letter by offering to make slight changes to the mark, to transition to a new mark, or otherwise limit the use of the mark. It’s like they say—actions speak louder than words.
And cease and desist letters and response letters invariably become frequently used exhibits in trademark litigation. If you want to make a settlement offer, I recommend doing it by way of a separate letter (or you could even broach settlement by phone). If you slap bolded and underlined FRE 408 FOR SETTLEMENT PURPOSES ONLY or INADMISSIBLE COMPROMISE MADE PURSUANT TO FRE 408 type language on the letter and keep the content focused solely on the offer, this separate letter is very unlikely to be used by the sender as an exhibit during litigation. Moreover, by saving your settlement offer for a second letter, you have something in your back pocket if the sender is not fazed by the initial response letter.
(On a separate but related note, if you do resolve the dispute, capture the agreement in a settlement agreement.)
Crafting Great Response Letters Is an Iterative Process
Just as I recommended at the end of my post on sending cease and desist letters, you should amass sample responses to trademark cease and desist letters. Borrow what works and leave what doesn’t. But don’t just rely on what others have drafted. Be your own source of content. I look at each new response letter that I have to draft as an opportunity to add a new point or to revise the language to make a point more effectively. Through that process—an iterative process spanning your legal career, your response letters will become masterpieces and you will have learned how to get them just right.