A cease and desist letter details the rights claimed by the sender, as well as the actions taken by the recipient that are allegedly infringing these rights. Normally, cease and desist letters are drafted by attorneys, and demand for certain actions to be taken. For instance, such a letter may claim that the recipient’s products infringe a trademark or patent, and demand that sales of these allegedly infringing products stop. Cease and desist letters usually threaten a lawsuit if these demanded actions are not promptly taken.

Upon receiving such a letter, a business can basically do three things. It can take the actions demanded by the sender to avoid a lawsuit. Or it can challenge the rights claimed by the sender. Lastly, a business may request that the supplier of allegedly-infringing products guarantee that they do not infringe the rights claimed in the cease and desist letter.

Complying with the cease and desist letter may be the least costly alternative. If sales of the allegedly-infringing products are low, then dropping that product to avoid a lawsuit may make sense. However, the recipient that chooses to comply with the cease and desist letter must have the sender promise in writing not to sue. Otherwise, the sender may conceivably sue for past damages even if the complained-of actions cease.

Challenging the rights being asserted in the cease and desist letter is probably the most expensive approach. An experienced attorney’s analysis detailing deficiencies in the claimed rights may be sufficient to stop the sender. However, this can lead to a very expensive lawsuit. Furthermore, even if the claim to the intellectual property is weak or tangential, proving that in court will be very expensive and time-consuming. It might be a Pyrrhic victory. As that legal aphorism goes, winning a lawsuit is the worst way to go bankrupt.

Lastly, a business may receive a cease and desist letter regarding products bought from a supplier. In such a case, the recipient should forward the letter to the supplier, who may insist that the sender’s assertions are frivolous. In that case, the recipient should ask the supplier to warranty that its products are not infringing, and to indemnify and defend the recipient against any action brought by the sender. Without these protections from the supplier, the recipient of a cease and desist letter should not take the supplier’s reassurances to heart.

Companies are becoming aware of the need to protect their intellectual properties. Cease and desist letters are the first step in asserting these rights, and they should not be ignored or taken lightly. A business has a few options in responding to the letters, but whatever choices are made has to be put down in writing to head off costly litigation.

Please keep in mind that this article should not be taken as legal advice. Only your attorney can give you legal advice.

By filing a provisional patent application, a small business may delay the expense of a regular, non-provisional application for up to a year. During that period, the small business may mark his invention with “patent pending” and shop it around without fear of theft by prospective business partners. If it is commercially worthwhile to patent the invention, the small business may choose to file a non-provisional patent application within twelve months of filing the provisional application and claim the earlier filing date of the non-provisional patent application. This would help establish superior rights to a patent over a competitor who filed during that twelve-month period.

For example, pretend that Jon files a provisional patent application for an improved parachute on April 1, 2000. He shops it to the military. The SEALs express interest in buying that parachute, so Jon files a non-provisional patent application on March 31, 2001. He can claim priority to the April 1, 2000 filing date of the provisional patent application.

The provisional patent application is much cheaper to file for many reasons. The application does not require formal oaths or declarations. It need not include any claims, which are difficult to draft properly. Most importantly, there is no need to have an information disclosure statement discussing the state of the art, which requires a prior art search.

However, Jon cannot patent a glider and claim the earlier priority date of his parachute application. The idea behind the provisional patent application is that a small business has a year to decide whether or not to patent the invention, but it cannot use that time to come up with the invention. The provisional patent application must disclose sufficient material to meet the patentability requirements of any inventions claimed in a later non-provisional patent application. The provisional application must include the names of all the inventors, a written description of the invention, and any drawings necessary to understand the invention.

After the twelve-month period has expired, the inventor cannot claim the benefit of the earlier filing date in a non-provisional patent application. It is very important to note that if the invention is found to be “in use” or “on sale” within the United States during the twelve month period without the filing of a corresponding non-provisional patent in that time, the inventor may lose the right to ever patent the invention. Thus, if Jon starts selling parachutes on March 1, 2001, but never gets around to filing a non-provisional patent application, he may lose the right to ever patent his parachute.

A provisional patent application may be very useful to a small business that is shopping its inventions. However, care must be taken so that full patent rights may be obtained in the future.

Trade secrets are confidential information that gives rise to a competitive advantage. Unlike other forms of intellectual property such as patents, which require public disclosure of confidential information in a government filing, trade secret protection keeps vital confidential information private. Another difference is that trade secrets do not expire. The prototypical trade secret is the formula for Coke, which has been a secret for over a century, and has given the company a strong advantage over its competitors. That said, a competitor who independently conceives of the trade secret is free to use it. A company that reverse engineers the composition of Coke, for example, is free to sell it without limitation by Coca-Cola

The law protects trade secrets against misappropriation, which is the use or disclosure of a trade secret that was obtained by abusing a relationship of trust, or by theft or bribery. Competitors are free to come up with the trade secret themselves, but they are not allowed to steal it. For example, an employee may quit and take the customer list to start his own competing firm. The customer list may be a trade secret if his former employer took the necessary steps to protect it.  In that case, the employee may be liable for damages, or even criminal penalties.

A business must take affirmative steps to protect its trade secrets. It must be able to demonstrate in court that the trade secrets were in fact secrets, and that it took reasonable steps to protect them from the public. If a business did not put much effort into protecting a trade secret, a court may not, either.

Primarily, a business has to treat its trade secrets as confidential materials. This includes limiting the number of employees privy to the trade secret and marking all copies of the trade secrets confidential. (But one should not mark all documents confidential as a matter of course, without regard to whether it is confidential or not.) Businesses should also require employees, especially those likely to access the trade secret, to sign employment contracts with confidentiality and non-compete clauses. Lastly, when sharing trade secrets with an outside party, a business must enter into a non-disclosure agreement whereby the recipient recognizes that the trade secret is confidential information, and agrees to maintain the confidence.

A business whose trade secrets are misappropriated can seek monetary damages for the lost business. It may also seek injunctive relief to force the misappropriating party to stop making use of the trade secrets.

Trade secrets are a valuable asset of any business. Establishing proper protection for the most confidential material is much less expensive than being left without a remedy when trade secrets are misappropriated.