Demand letters are sent all the time. Being successful makes you a target. In the United States, anyone can sue you for any reason. Anyone can demand that you “cease and desist” whatever you are doing that makes you successful. Anyone can make demands hoping you give them some of the fruits of your hard work and success.
Most lawsuits don’t come out of the blue. Normally, you have some inclination that there is a dispute. You have received demands. You have received letters. You know something is going on.
Today, let’s talk about taking the offensive.
Maybe you have heard of “Empire”, the hit new Fox show about a record label and the family feud behind the scenes. This show has seen massive success, both in its viewership as well as the chart topping soundtrack album from the season. In response to the success of the show, a company called “Empire Distribution, Inc” has sent demand letters because of the show’s infringement on its trademark.
Fox, of course, decided not to bow to the demands of Empire Distribution company, but instead filed a declaratory judgment action asking the court to declare it has every right to name it’s show “Empire”.
The legal issues of this particular case aside, Fox taking this action is an example of taking the offensive to protect your legal rights.
There is a reason we have a court system. The court system helps rule over disputes over rights and interpretation of the law. Business and intellectual property are no different. It is not uncommon for someone to poach another company’s success by claiming some right over whatever makes the company successful. I am not commenting on whether that is what Empire Distribution is doing, I am just saying it is a common occurrence in the world of business.
Of course, different businesses have different tolerances for this type of activity. Some are willing to simply settle to make the case go away. Some are willing to fight the battle to avoid an onslaught of similar claims when news gets out that your business will simply roll over and settle.
So, what should you do?
It all depends on what issues are at stake. Are you in a situation where you may be infringing. Is it possible you are in the wrong? This is something you should consider. You do not want to ruin your business reputation by fighting a battle simply because you have the money to fight even though you are in the wrong. But, if you are not in the wrong, you should fight to protect yourself. Not everything needs to go to court, but you have a few options, even if you are on the receiving end of a demand letter.
Remember, everything is negotiable. If someone sends a demand, you should consider the issues at hand. You should consider whether you may be in the wrong. You should consider the value of the dispute. Then, you should negotiate. You are not required to bend to every demand letter you receive. You may want to assert your rights. You may have some points of your own. In that case, reach out to the person who wrote the demand and try to work it out.
Ignore the Demand Letter
Sometimes, a cease and desist letter is sent and it doesn’t mean anything. Sometimes a company demands you do something, but they never follow up. Some companies have a practice of sending out demands all the time and never following up. The hope is that more people will follow the demands than not and they will get what they want at little cost to the company. If you do not believe the demand is serious or you believe you have a case of your own, you can simply ignore it. Don’t waste your time and energy on it until you know it actually matters. Of course, this can blow up in your face. Ignoring demand letters can create large issues down the road. Taking a little time now may be worth avoiding the headache of litigation down the road.
Assert Your Rights
Most lawsuits are disputes between two parties. The party who feels wronged sues the party they believe did the wronging. There is, however, another option. You can take a page out of Fox’s playbook and assert your rights as Fox has done with Empire. A declaratory judgment action is a suit that is filed asking a judge to declare that you do, in fact, have the right to do the thing you are doing. It is a preemptive move that allows you to be in control of the dispute and to resolve it by asking the court to make a determination of your rights. Of course, as Pharrell and Robin Thicke discovered, this can back fire on you. You can lose. You may be forced to pay money. It may be more money than you could have negotiated to deal with the problem at the outset.
Take a Calculated Risk
You have options if you receive a demand letter from a lawyer (or another business). Even if you choose to ignore a letter like this, you are making a decision. And it could backfire on you.
Of course, as a lawyer, I am supposed to tell you to seek out counsel. To determine what your rights are. To know if you have a case. To know the best way to proceed. All of that is, of course, true.
As a lawyer, I will also tell you to do your homework up front.
- Check your trademark before you start using it.
- Create something original.
- Ask for permission if there is a question.
Of course, it is up to you. You are building a business. You have a dream. If you do your research and you know the issues before you start, and you are willing to take the risk. That is what makes you an entrepreneur. Just make sure you are not taking risks without calculating the cost.