We’ve written about how to send a cease-and-desist letter, but what should you do if have received a cease-and-desist letter?
The answer depends on the circumstances, including whether the claims in the letter are valid and enforceable, but you should contact your Houston, Texas, business law attorney immediately before responding to (or ignoring) the letter.
In this article, we will discuss what you should do if you receive a cease-and-desist letter in Texas, including:
- When and how to respond to a cease-and-desist letter,
- When to ignore a cease-and-desist letter, and
- Various situations where you might receive a cease-and-desist letter from a government agency, individual, or corporation.
Received a Cease-and-Desist Letter from a Government Agency
If you have received a cease-and-desist letter from a government agency, you should immediately consult your corporate attorney to determine your next steps.
Unlike cease-and-desist letters from an individual or corporation, you should never ignore a communication from a government agency – doing so could result in an enforcement action, lawsuit, fines, or even loss of your business license, depending on the circumstances.
Depending on the situation, you may need to promptly:
- Comply with the demands in the letter,
- Have your attorney contact the agency to request additional information or present facts to dispute the contents of the letter,
- Request an administrative hearing or appeal, or
- File a declaratory judgment action in court.
Any government agency may issue a cease-and-desist letter – below are a few examples.
In February of this year, the FDIC issued cease-and-desist letters to CEX.IO Corp. (a cryptocurrency exchange), Zera Financial (a non-bank financial service provider), Captainaltcoin.com, and Banklesstimes.com, demanding that they stop making false and misleading statements about FDIC deposit insurance.
Last year, the FCC issued cease-and-desist letters to “robocall facilitators” including Thinq Technologies, Airespring, and Hello Hello Miami, demanding that they remove illegal robocall traffic from their networks or be disconnected from downstream networks.
The Texas Workforce Commission issued cease-and-desist orders against 19 businesses “for operating a career school without a valid certificate of approval or exemption as required by the Texas Education Code, and “warn[ed] potential students” of the action taken.
Received a Cease-and-Desist Letter from an Individual or Corporation
You may have more options when you receive a cease-and-desist letter from an individual or a corporation. Your corporate counsel can review the letter and any contracts or agreements on which the claims are based, determine whether there is a valid claim against you or your company, and advise as to your next steps which may include:
- Replying to the letter to request more information,
- Replying to the letter to explain why the sender is wrong,
- Promptly complying with the letter’s demands,
- Filing a preemptive lawsuit or preparing counterclaims to file in the event the sender files suit against you, or
- Ignoring the letter if it does not state a valid claim that could be enforced in court.
A cease-and-desist letter could be based on any behavior that infringes on a person’s or corporation’s rights. If the letter states a valid claim, it should not be ignored – your attorney might be able to avoid a lawsuit through negotiations or help you to prepare to defend the lawsuit before it is filed.
If you receive a cease-and-desist letter that claims you are infringing upon someone’s trademark, your attorney can help you to:
- Determine whether the sender has registered their trademark,
- If the trademark is not registered, determine whether the sender has established a common law right to the trademark,
- Challenge the trademark through the Trademark Trial and Appeal Board (TTAB),
- Negotiate a resolution with the sender,
- File a declaratory judgment action asking the court to declare that your trademark does not infringe on the sender’s or that the sender’s trademark is invalid, or
- Prepare a defense and counterclaims.
Companies or individuals often use a DMCA Notice, or “take down” notice, to “inform a company, web host, search engine, or internet service provider that they are hosting or linking to material that infringes on a copyright” and demand that they remove the offensive material or suffer legal consequences.
Violation of Non-Compete, Non-Solicitation, or Other Employment Agreements
Former employers or business associates may send cease-and-desist letters alleging a violation of non-compete, non-solicitation, or other employment agreements. If you have received one, your attorney can help you to determine whether 1) you are in fact violating the agreement and 2) the agreement is enforceable.
Misappropriation of Trade Secrets
If you receive a cease-and-desist letter threatening legal action for misappropriation of trade secrets or customer lists, before responding, your attorney can help you to determine whether 1) the subject matter qualifies as a trade secret under Texas law and 2) whether the trade secret was “misappropriated” under Texas law.
Slander, Libel, or Defamation
Cease-and-desist letters often allege defamation, giving the alleged defamer an opportunity to stop what they are doing and mitigate the damage they are causing by spreading harmful mistruths about the sender (or increase the damage by “doubling down” on the false statements).
In some cases, cease-and-desist letters are political in nature, informing media outlets that they are running false and defamatory political ads.
Regardless of the nature of the cease-and-desist letter, your first step should be to consult with your business law attorney to determine whether the demand is legally enforceable and what your next steps will be.
Please feel free to contact one of our Murray Lobb attorneys to obtain our assistance in sending or replying to a cease-and-desist letter on behalf of your business. We also remain available to help you with all your general corporate, construction law, business, and estate planning needs.