Patent and trademark demand letters

9.1Trademark: what the letter claims

That the sender owns a mark, often federally registered under the Lanham Act,¹ that your name, logo, product name or domain is likely to cause confusion with it among consumers, and that you must stop using it, transfer the domain, and sometimes account for profits. The Lanham Act provides for injunctions and, in appropriate cases, the infringer's profits, damages and costs, with enhanced amounts for counterfeiting.² Many arrive as a cease and desist; see I received a cease and desist letter. Do I have to stop?

9.2Trademark: how to judge it

1. Is the mark registered, and for what? Search the USPTO database. A registration covering the same goods or services as yours is serious. One covering unrelated goods is less so, unless the mark is famous.
2. Who used it first? Trademark rights in the United States come from use. If your use predates theirs in your area, you may have rights of your own. Gather dated evidence of first use: invoices, ads, domain registration, social accounts.
3. How similar are they? Sight, sound and meaning, judged from a consumer's view, in the context of the goods.
4. What would changing cost? A new logo for a six-month-old business is cheap. A new name for an established one is not.

9.3Trademark: what to do this week

1. Do not reply substantively until you have checked the registration and your own first-use evidence.
2. Send a short holding reply: received, taking advice, will respond by a date.
3. Preserve evidence of your use and of theirs.
4. Get an hour with a trademark lawyer. Many clearance questions are answered quickly. Finding a lawyer, and what the first call should cover explains where to look.
5. Decide: contest with evidence of priority or lack of confusion; negotiate coexistence (an agreement that both can use their marks within defined limits); or rebrand on a timetable, which the sender will often accept without payment if proposed early.

9.4Patent: what the letter claims

That the sender holds a patent, identified by number, and that a product, feature or process you sell or use practises one or more of its claims. The Patent Act makes it infringement to make, use, sell or offer to sell a patented invention without authority,³ and provides damages adequate to compensate, not less than a reasonable royalty, which a court may increase up to three times.⁴ Patent letters to small businesses often come from entities that license patents rather than make products, and often concern features such as online ordering, scanning, or messaging.

9.5Patent: how to judge it and what to do

Infringement is assessed claim by claim against the exact words of the patent, which is specialist work. Do not attempt it yourself and do not reply with an opinion about whether you infringe. Instead:

1. Look up the patent number on the USPTO site to confirm it exists, who owns it, and whether it has expired.
2. Preserve records of the product or feature and when you started using it.
3. If the feature came from a supplier or platform, ask them whether they indemnify you; many do, and many have already dealt with the same sender.
4. Engage a patent lawyer before any substantive reply. Ask specifically whether the letter is part of a campaign and what has happened to other recipients.
5. Send only a holding reply until then.

Patent matters are expensive to litigate on both sides, which is why most letters of this kind seek a licence fee well below litigation cost. Whether to pay one is a decision made on the lawyer's assessment of the claims, not on the letter's tone.