The trademark cease-and-desist notice is the most important and most widely used instrument for asserting claims arising from trademark infringements. Its primary purpose is to prevent a court dispute (preliminary injunction, injunction action) over trademark rights. The trademark owner therefore issues a cease-and-desist notice before court proceedings in order to give the infringer the opportunity to fulfil the claims arising from a trademark infringement out of court.
Summary
- With a cease-and-desist notice, a trademark owner asserts a trademark infringement out of court.
- Cease-and-desist notices in trademark law are not always justified (though they often are). Whether a trademark infringement actually exists should be examined by a specialist trademark attorney.
- With a cease-and-desist undertaking, the legal dispute can frequently be resolved out of court. Caution: cease-and-desist undertakings are valid for an indefinite period and should therefore never be given hastily or without examination.
- In addition to injunction claims, disclosure, damages and cost reimbursement claims are frequently also asserted. These can be justified if a trademark infringement was actually committed.
- The attorney fees demanded for reimbursement usually amount to between €1,250 and €2,500.
- A deadline stated in the cease-and-desist notice, in particular the deadline for giving a cease-and-desist undertaking, should never be ignored. Expensive trademark law court proceedings are otherwise threatened.
1. Introduction to the cease-and-desist notice in trademark law
A trademark law cease-and-desist notice is initially often a very unpleasant surprise for the recipient, particularly because of the attorney fees demanded, which can amount to a mid-four-digit sum. It is important first of all to stay calm, because not every cease-and-desist notice in trademark law is justified and the attorney fees demanded are often excessive. Those who have received a cease-and-desist notice should therefore be sure to seek professional help from an attorney specialising in trademark law. A specialist attorney will examine whether and to what extent the asserted claims are justified and, where appropriate, develop a suitable defence strategy.
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2. What is a trademark law cease-and-desist notice?
With a cease-and-desist notice for trademark infringement, the rights holder asserts claims under the Trademark Act (MarkenG) or the EU regulation on the Community trade mark (CTMR). The key trademark law claims are:
- Elimination of the trademark infringement,
- future injunction against the trademark infringement,
- disclosure of the nature and extent of the trademark infringement committed,
- payment of damages,
- reimbursement of the legal enforcement costs incurred by the trademark owner.
The injunction claim and the claim for reimbursement of legal enforcement costs (attorney fees) play a central role in trademark law cease-and-desist notices. These two claims are namely pursued with cease-and-desist notices almost always.
Cease-and-desist notices in trademark law are not subject to any specific formal requirement. They can be issued orally, by email, by fax or by letter. Frequently, however, those issuing the notice choose the written route for reasons of evidence.
Cease-and-desist notices are usually structured in a similar pattern, which follows the requirements for cease-and-desist notices developed by the courts. First, the party issuing the notice presents the facts and explains what conduct of the recipient they consider an infringement. Subsequently, the giving of a penalty-backed cease-and-desist undertaking is demanded, in order to eliminate the risk of repetition of further infringements. In most cases, a pre-drafted cease-and-desist undertaking is already enclosed. Furthermore, the party issuing the notice demands disclosure of the trademark infringement acts, damages and reimbursement of the attorney fees incurred for the cease-and-desist notice.
Very short deadlines of a few days are frequently set for giving the cease-and-desist undertaking. The deadlines are set short because the party issuing the notice may wish to assert injunction claims in expedited court proceedings. Court action is regularly expressly announced in trademark law cease-and-desist notices.
3. When is a cease-and-desist notice in trademark law unjustified?
A cease-and-desist notice is unjustified in trademark law when
- no trademark infringement exists (more on this immediately below),
- the recipient is not responsible for it,
- the party issuing the notice is not the materially entitled holder of the trademark,
- the formal requirements for a cease-and-desist notice have not been met, and/or
- a case of an abusive cease-and-desist notice exists.
The question of whether a trademark infringement exists at all is complex and must be examined in accordance with the law and the extensive case law on trademark law. Most unjustified cease-and-desist notices in trademark law fail on the prerequisite of a material trademark infringement. It does, however, also occur that a cease-and-desist notice was not issued against the correct (actual) trademark infringer, or that a cease-and-desist notice is formally invalid because the alleged infringement is not sufficiently explained in it.
An abusive cease-and-desist notice in trademark law may exist where a trademark was applied for in bad faith and serves only to unfairly hinder competitors. Mass cease-and-desist notices in trademark law can also be abusive where they serve exclusively to generate reimbursement claims for legal enforcement costs. The courts are, however, with the finding of abuse in trademark law cease-and-desist notices, unlike in competition law, very restrained so far.
4. When is a trademark law cease-and-desist notice justified?
A cease-and-desist notice is only justified if there is any trademark infringement at all. Trademark owners enjoy an exclusive right in their trademark. They can therefore in principle prohibit others from using identical or similar signs to identify identical or similar goods or services. This impairs the protected function of a trademark as an indicator of origin. To explain with a simple example: if someone builds a car and calls it "Mercedes", a trademark infringement exists, because potential customers would expect a vehicle with the name "Mercedes" to be a vehicle from a famous car manufacturer from Stuttgart, who is the holder of the word mark "Mercedes-Benz".
The conceivable constellations of trademark infringements are so varied and complex that a presentation and explanation would exceed the scope of this guide. The legal examination should be left to an attorney. In summary, however, it can be said that trademark owners are protected from confusion. The registered trademark enjoys identity and similarity protection and protection against exploitation and reputation misappropriation. The law also regulates various restrictions on trademark protection.
No trademark infringement exists in particular in the following cases, in which cease-and-desist notices are nevertheless frequently issued:
- The recipient uses the trademark not to identify their goods or services, but only for descriptive purposes.
- The trademark of the party issuing the notice and the sign used by the recipient are not so similar that they can be confused with each other.
- The product range of the party issuing the notice and the recipient are so dissimilar that confusion can be ruled out.
- The trademark right is exhausted. That means the recipient has acquired branded goods from an authorised third party that they are free to sell.
- The party issuing the notice has not themselves sufficiently used their trademark (violation of the so-called obligation to use).
- The party issuing the notice has tolerated the use of the trademark by the recipient for a period of at least five years.
5. The cease-and-desist undertaking – content and effect
The cease-and-desist undertaking is the central instrument for the out-of-court fulfilment of injunction claims. If it is penalty-backed, it can eliminate the risk of repetition arising from a committed trademark infringement, so that an action by the trademark owner for an injunction would be deprived of its basis.
Risk of repetition means in this context that there is objectively the possibility that the trademark infringement could be committed again at any time. The risk of repetition is presumed where a trademark infringement has already been committed. With a cease-and-desist undertaking, a court dispute can be avoided if an infringement actually exists. The cease-and-desist undertaking is penalty-backed when the declarant undertakes to pay a penalty in the event that they commit the trademark violation again. Only with the agreement of a contractual penalty does the declaration become "binding" and the party issuing the notice can rely on the trademark infringement not being repeated.
It is strongly inadvisable to sign the cease-and-desist undertaking often enclosed with a cease-and-desist notice without examination. A cease-and-desist undertaking is valid for 30 years – during this period it must therefore be ensured that no further trademark violations occur. The pre-drafted cease-and-desist undertakings from the party issuing the notice are often too far-reaching, e.g. because the obligation to cease is too vague or the contractual penalty demanded is excessive.
The party issuing the notice has no right to demand a specific cease-and-desist undertaking according to their wishes. Only a cease-and-desist undertaking that eliminates the risk of repetition is required. It is therefore generally advisable to give a cease-and-desist undertaking that is modified and limits the declarant's obligations to the bare minimum necessary. For example, it is permissible not to specify a certain amount of contractual penalty, but to leave the amount to the discretion of the creditor and have it reviewed by a court in the event of a dispute (the so-called Hamburg practice).
A cease-and-desist undertaking should generally not be given where no trademark infringement exists, unless the person affected can rule out committing the acts alleged against them in the future. A cease-and-desist undertaking is binding regardless of the legal position, because it leads, when the party issuing the notice accepts the declaration, to a cease-and-desist contract. Under no circumstances should a cease-and-desist undertaking be given in which the recipient undertakes in addition to the injunction to pay damages and/or attorney fees.
6. What happens if no cease-and-desist undertaking is given?
If no cease-and-desist undertaking is given within the deadline set in a cease-and-desist notice, the party issuing the notice can either apply for a preliminary injunction in expedited court proceedings on the basis of their trademark or file an injunction action with the competent regional court.
Of course, a preliminary injunction in trademark law or an injunction judgment will only be issued by a court if in the judges' view a trademark infringement actually existed and a risk of repetition exists. The party issuing the notice has no obligation to take court action against the alleged trademark infringer. It is therefore also conceivable that after a cease-and-desist notice no court steps are taken and the matter fizzles out. Recipients of a cease-and-desist notice should under no circumstances rely on this, however.
7. Disclosure and damages claims
If a trademark infringement is committed culpably, i.e. negligently or intentionally, the trademark owner can demand damages. In order to be able to quantify the damage incurred, disclosure of the nature and extent of the infringement is frequently demanded in cease-and-desist notices. This disclosure claim is regulated by statute.
The amount of damages can be calculated in various ways. The trademark owner may choose the most favourable method of calculation. The most popular is calculation by way of the so-called licence analogy.
Disclosure and damages claims are of course not available if no trademark infringement is attributable to the recipient.
8. Costs of a cease-and-desist notice in trademark law
If the cease-and-desist notice is justified, the party issuing the notice can in principle demand reimbursement of the legal enforcement costs incurred by them. The costs of the trademark law cease-and-desist notice can be claimed in court by the party issuing the notice, even if a cease-and-desist undertaking has been given. If an attorney or patent attorney is engaged to draft a cease-and-desist notice, the attorney and patent attorney fees incurred are to be reimbursed to the party issuing the notice. The amount of these costs is governed by the Attorney Remuneration Act (RVG). Under this Act, attorney fees are calculated on the basis of the dispute value to be applied in each individual case. The higher the dispute value, i.e. the significance of the matter, the higher the attorney fees incurred. The rule applies: the more valuable the trademark underlying the cease-and-desist notice and the more serious the infringement, the higher the dispute value.
In trademark law, courts regularly set dispute values between €25,000 and €100,000. The attorney fees for a cease-and-desist notice derived from this amount to between €1,250 and €2,500. The costs of a cease-and-desist notice are not to be reimbursed if the notice was unjustified, e.g. if no trademark violation existed or the notice was formally invalid.
9. Options and costs of legal defence against a cease-and-desist notice
If the recipient engages a specialist trademark attorney, they will examine the cease-and-desist notice and, depending on the legal position, the recipient's interest in continuing to use the trademark or similar signs, and the defence budget, develop an optimal strategy for safeguarding the recipient's interests. The options are varied and must be explored in each individual case. Generic advice is not appropriate here, because every case is different.
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The amount of the recipient's own attorney fees depends on the individual defence measures to be taken and should be agreed in advance with the engaged attorney.
Where a trademark violation exists, it is possible, for example, to give a modified cease-and-desist undertaking and negotiate the amount of costs to be reimbursed with the opponent. Where no trademark violation exists and it is important to the recipient to be permitted to continue using the sign or trademark in the future, a defence letter to the party issuing the notice can be drafted, and a so-called protective notice can be filed at the competent regional court to prevent a court preliminary injunction.
There are even cases where it is advisable to risk a court injunction order rather than give a cease-and-desist undertaking.
If the cease-and-desist notice is unjustified, in many cases the recipient can demand reimbursement of their own legal defence costs (e.g. the costs of their own attorney) as damages on the grounds of an unjustified intellectual property warning.
10. I have received a cease-and-desist notice – how do I respond correctly?
First of all, it is important to stay calm. Trademark law is a very complex matter. The examination of cease-and-desist notices and legal defence should therefore be in the hands of specialist trademark attorneys. For this reason, seeking legal advice is strongly recommended. Our advice: seek legal help.
Be sure to observe the deadlines stated in the cease-and-desist notice, in particular the deadline for giving a cease-and-desist undertaking. If there is no response within the deadline, the party issuing the notice can seek court assistance and, for example, apply for the issuance of a preliminary injunction.
You should not hastily make contact with the party issuing the notice and allow concessions to be extracted from you. Still less should you give any cease-and-desist undertaking without examination. Caution is advised with regard to notes and advice from internet forums. Every case of a trademark law cease-and-desist notice is different. The legal position, in particular the justification of the cease-and-desist notice, must be examined in each individual case.
11. Your attorney for trademark law cease-and-desist notices
As a law firm that specialises, among other things, in intellectual property rights, we are very familiar with trademark law cease-and-desist notices. For our clients, we examine trademark law cease-and-desist notices thoroughly for their justification, in particular whether a trademark infringement exists. Where necessary, we give modified cease-and-desist undertakings for our clients and negotiate with the party issuing the notice about the amount of attorney fees to be reimbursed. Where no trademark infringement exists, we reject the claims of the party issuing the notice and take the necessary defence measures, e.g. lodging a protective notice with the court.
We also stand at the side of our clients in trademark infringement actions and take over the defence in injunction and damages proceedings as well as in expedited court proceedings. Where an unjustified cease-and-desist notice has been issued, we also bring proceedings for our clients' damages claims against the party who issued it.
Every individual step in the defence is of course coordinated with our clients.
Have you received a trademark law cease-and-desist notice? As a specialist trademark law firm in Berlin, we at ab&d Rechtsanwälte are happy to assist you with our many years of expertise!
