United States: Walking The Tightrope Of Cease-And-Desist Letters

Cease-and-desist letters, and less aggressive notice letters, can serve several purposes for patent owners. Among other things, they can open licensing negotiations, serve as warnings to competitors, create notice for damages, and establish knowledge for indirect infringement. But sending these letters can also be risky. Following the U.S. Supreme Court's MedImmune v. Genentech decision,1 the letters may more easily create declaratory judgment (DJ) jurisdiction, allowing a potential defendant to select its preferred forum and to control the timing of an action. Despite the tension between these competing doctrines, courts have acknowledged that it is possible to send legally effective cease-and-desist letters2 while also avoiding DJ jurisdiction. To do so, patentees must carefully approach these letters to minimize risks while still achieving their goals. A closer look at these issues reveals several ways to minimize this risk.

Declaratory Judgment Jurisdiction: A Look at the Totality of the Circumstances

In MedImmune, the Supreme Court evaluated DJ jurisdiction under a totality-of-the-circumstances test, where there must be "a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant relief."3 Looking to the totality of the circumstances, courts analyze the contents of a cease-and-desist letter as a key factor—but often not the only factor—in assessing DJ jurisdiction. Other factors include the relationship of the parties, litigation history of the patent owner, actions of the parties, and more, as discussed below in the context of the MedImmune test.

Creating a "Substantial Controversy" through Cease-and-Desist Letters

The "substantial controversy" requirement allows potential infringers to challenge infringement claims and patent validity without "betting the farm"4 by requiring potential infringers to make (or continue to make) a potentially infringing product. But when do a patentee's actions create a substantial controversy? In SanDisk v. STMicroelectronics, for example, the U.S. Court of Appeals for the Federal Circuit's analysis searched for an act by the patent owner indicating it would enforce its rights. The court found that the patent owner provided a clear intent to enforce its rights by, among other things, providing detailed infringement charts explaining how the accused infringer violated its patents. But patentees rarely provide such clear accusations when they want to avoid DJ jurisdiction, and the court refused to define the boundaries in this case.

The court extended its analysis in decisions following SanDisk. The Federal Circuit has consistently stated that "a communication from a patent owner to another party, merely identifying its patent and the other party's product line" is not enough for a definite and concrete dispute.5 Still, simply avoiding specific threatening phrases, such as "you are infringing my patent," generally does not inoculate a patent owner's letter from creating DJ jurisdiction. Instead, the language of the letter usually must connect the patents with an accused product, and the language or circumstances surrounding the letter must suggest that the patent owner will assert its patent rights. While a strongly worded letter may be sufficient alone to trigger DJ jurisdiction, many letters use less threatening language. In those instances, courts do not stop their analysis at the words of the letters. All communications become relevant, with courts considering informal conversations,6 the history of the parties (e.g., whether they have a litigious history),7 later discussions between the parties about the contents of the letters,8 and more. Courts analyze these facts collectively to determine whether a patent owner signaled an intent to assert its rights, creating a definite and concrete dispute.

As an example where the court found no DJ jurisdiction, in Element Six v. Novatek9 the patent owner worded its letter as an information gathering tool. It requested information on the accused infringer's products so that it could determine potential liability. The court did not consider this to be a demand or accusation. Instead, the court viewed it as an attempt to gather information to determine the rights of the patent owner. Further, the patentee did not provide additional information on its patents or a potential infringement analysis until the accused infringer requested the information. The court did not find this later-arising information to contribute to DJ jurisdiction because the accused infringer asked for it as opposed to the patent owner using it to threaten filing suit. The court focused on the information in the original letter and determined that a request for information was not a definite enough threat to enforce the patent owner's rights and did not create a substantial controversy.

"Sufficient Immediacy and Reality" in the wake of Cease-and-Desist Letters

Some view the "sufficient immediacy and reality" requirement to be more straightforward than the "substantial controversy" requirement. In general, if a recipient allows time to pass between receiving a cease-and-desist letter and filing a DJ action, the delay will undermine the immediacy and reality of the dispute. Patent owners seeking to avoid DJ jurisdiction can further bolster this argument by showing that the accused infringer has not taken any corrective action in response to the letter or other communications.10

But even with the passage of time, courts might still find sufficient immediacy and reality if the patent owner has taken other actions in the interim. For example, a potential infringer might believe they are a target of the patent owner if the patent owner has sued others in the same market after sending similar cease-and-desist letters. The potential infringer may believe that the patent owner simply has not gotten around to suing it, creating an immediacy and reality to support DJ jurisdiction.11

An accused infringer can also retain the immediacy and reality of a controversy if it temporarily takes corrective action to avoid the accused conduct but is still prepared and wanting to revert to its original accused conduct. This is true even if the alleged infringement had abated for many years. In Myriad,12 for example, the patent owner sent a letter demanding that the accused infringer refrain from performing its patented tests. The accused infringer refrained from performing the tests for 10 years but then filed a DJ action. The court found sufficient immediacy and reality based in part on the fact that the parties' legal positions had not changed during the abatement. The patent owner had continued asserting its patent rights by demanding that accused infringers run their tests through the patent owner, suing those who violated these terms. The accused infringer in this case succumbed to these threats and did not provide accused services to his patients. The court also noted that the accused infringer wanted to provide and was ready to provide the patented tests. The court even compared this with the fact that it affirmed the dismissal of claims by other accused infringers who stated they may want to provide the tests. Because these facts did not change over the 10 years between the letter and the DJ action, the immediacy and reality of the suit did not dissipate.

It is important to remember that this is not a rigid, formulaic analysis. Courts have said that attorneys cannot simply prevent DJ jurisdiction by avoiding "magic words" such as "litigation" or "infringement." Instead, courts evaluate the totality of the circumstances and determine whether the accused infringer is reasonably concerned about being sued to the point of satisfying these two requirements. This dynamic prevents the courts from clearly defining a universal set of language that would always avoid DJ jurisdiction in a cease-and-desist letter, further complicating the balancing act that patent owners must perform when sending letters to create notice for damages or knowledge for indirect infringement.

The Interplay Between DJ Jurisdiction and Notice for Damages

To recover damages for patent infringement, a patent owner must provide actual or constructive notice to the accused infringer.13 A cease-and-desist letter may provide actual notice, but to do so it must "assure that the recipient knew of the adverse patent during the period in which liability accrues."14 The courts focus on the acts by the patent owner to put the accused infringer on notice, not any independent knowledge the accused infringer may have separately developed regarding the patent.

To provide this notice, the Federal Circuit has stated that "the actual notice requirement of § 287(a) is satisfied when the recipient is informed
of the identity of the patent and the activity that is believed to be an infringement, accompanied by a proposal to abate the infringement, whether by license or otherwise."15

At first glance, this appears to create a binary choice either to avoid DJ jurisdiction and fail to create notice for damages, or to create both DJ jurisdiction and notice. But courts insist the rules are not coextensive. For example, the Federal Circuit noted the distinct requirements and purposes of these doctrines in SRI International v. Advanced Technology Laboratories:

The criteria for actual notice under § 287(a) are not coextensive with the criteria for filing a declaratory judgment action. These statutory purposes are distinct, serve different policies, and are governed by different laws. The requirement of actual notice under § 287(a) is designed to assure that the recipient knew of the adverse patent under the period in which liability accrues, when constructive notice by marking is absent. Actual notice may be achieved without creating a case of actual controversy. . . .16

Despite this recognition, courts generally analyze challenges to DJ jurisdiction and notice for damages at different stages of the litigation, preventing them from providing a direct comparison.17 Still, analyzing the rules for notice can be instructive.

Identifying the asserted patent is fairly straightforward. While rare cases have not required a patent owner to identify the patent number,18 it is generally not advisable.19 Courts allow more flexibility in identifying an accused product, however. Patent owners can generally identify a line of products and often are not required to identify a particular product by its model number. This allows patent owners to be less specific in their letters, which could undermine DJ jurisdiction in some instances. In PCT International v. Holland Electronics, the patent owner identified an entire family of products as potentially infringing its patents.20 The accused infringer insisted that the patent owner needed to identify specific model numbers the patent owner thought were infringing, but the court disagreed and still held the patent owner's letter created sufficient notice for damages.21

The notice feature that most affects potential DJ jurisdiction is the specific charge of infringement. Despite its title, the patent owner does not have to actually accuse infringement.22 In Gart v. Logitech, the Federal Circuit held that a letter stating that the accused infringer "may wish to have [its] patent counsel examine the . . . patent . . . to determine whether a non-exclusive license under the patent is needed" was enough specificity to create notice.23 In the court's view, the entire purpose of a license is to inoculate oneself from infringement, equating the statement with a charge of infringement. Other courts have also held offers to discuss licensing to satisfy this factor and create notice for damages.24

The Interplay Between DJ Jurisdiction and Notice for Indirect Infringement

Cease-and-desist letters can also establish knowledge to support indirect infringement charges, including induced and contributory infringement. Doing so requires a patent owner to provide similar information as notice for damages, but with a twist.25 Both indirect infringement doctrines require knowledge of the patent and the alleged infringement, but induced infringement further requires that the accused infringer intended the infringement while contributory infringement requires that the accused infringer knew that "the combination for which its components were especially made was both patented and infringing."26 These additional requirements may require different language in the infringement charge to serve as evidence of indirect infringement. For example, in Fujitsu v. LG the Federal Circuit found that the patent owner had sufficiently proven notice of infringement for purposes of starting the damages clock, but the court remanded for the jury to determine whether the cease-and-desist letter had created knowledge that the combination of components would infringe, not just that there was infringement generally.27

Walking the Tightrope

Balancing the competing concerns of cease-and-desist letters can be a delicate dance. Each doctrine presents a complex analysis by itself, but the courts insist that patent owners can send letters that avoid DJ jurisdiction but still create notice for damages and, by extension, knowledge for indirect infringement. But courts have not identified specific approaches for achieving this. Instead, they more generally state that the DJ jurisdiction analysis is an independent inquiry from the notice inquiries, as noted above when discussing SRI International.

Courts also are not faced with deciding both issues at the same time, as the DJ jurisdiction question arises as one of the first issues in a case while notice issues arise much later. And even in instances where the court addresses aspects of both issues simultaneously, such as when a court addresses the DJ jurisdiction question in conjunction with a motion to dismiss for failure to state an induced infringement claim, the court will apply a lower standard to the pleading sufficiency of the induced infringement claim than will ultimately be required to prove induced infringement later in the case. At the pleading stage, the induced infringement claim need only recite sufficient facts to be plausible beyond "a formulaic recitation of the elements of a cause of action."28 In addition to applying this lower evidentiary standard, the court also assumes that the facts recited in the claim are true. This plausibility analysis is hardly a detailed balancing of all the facts. Accordingly, patent owners are left to piece together the complex analysis to balance all of their concerns.

In addition to these federal legal concerns, states have taken an interest in curbing bad-faith cease-and-desist letters. Vermont, for example, has passed a law creating a cause of action against the sender of a letter if the letter was sent in bad faith.29 The law lists nine factors that may demonstrate bad faith:

1. The demand letter does not contain the following information:

(A) the patent number;
(B) the name and address of the patent owner or owners and assignee or assignees, if any; and
(C) factual allegations concerning the specific areas in which the target's products, services, and technology infringe the patent or are covered by the claims in the patent.

2. Prior to sending the demand letter, the person fails to conduct an analysis comparing the claims in the patent to the target's products, services, and technology, or such an analysis was done but does not identify specific areas in which the products, services, and technology are covered by the claims in the patent.

3. The demand letter lacks the information described in subdivision (1) of this subsection, the target requests the information, and the person fails to provide the information within a reasonable period of time.

4. The demand letter demands payment of a license fee or response within an unreasonably short period of time.

5. The person offers to license the patent for an amount that is not based on a reasonable estimate of the value of the license.

6. The claim or assertion of patent infringement is meritless, and the person knew, or should have known, that the claim or assertion is meritless.

7. The claim or assertion of patent infringement is deceptive.

8. The person or its subsidiaries or affiliates have previously filed or threatened to file one or more lawsuits based on the same or similar claim of patent infringement, and:

(A) those threats or lawsuits lacked the information described in subdivision (1) of this subsection; or
(B) the person attempted to enforce the claim of patent infringement in litigation and a court found the claim to be meritless.

9. Any other factor the court finds relevant.30

Vermont's law also identifies several factors that
may negate bad faith on the part of the letter's

1. The demand letter contains the information described in subdivision (b)(1) of this section [bad faith factor (1) listed above].

2. Where the demand letter lacks the information described in subdivision (b)(1) of this section and the target requests the information, the person provides the information within a reasonable period of time.

3. The person engages in a good faith effort to establish that the target has infringed the patent and to negotiate an appropriate remedy.

4. The person makes a substantial investment in the use of the patent or in the production or sale of a product or item covered by the patent.

5. The person is:

(A) the inventor or joint inventor of the patent or, in the case of a patent filed by and awarded to an assignee of the original inventor or joint inventor, is the original assignee; or
(B) an institution of higher education or a technology transfer organization owned or affiliated with an institution of higher education.

6. The person has:

(A) demonstrated good faith business practices in previous efforts to enforce the patent, or a substantially similar patent; or
(B) successfully enforced the patent, or a substantially similar patent, through litigation.

7. Any other factor the court finds relevant.31

On top of balancing these legal concerns, a patent owner must also balance its business goals. If the intent is to start a dialogue, the cease-and-desist letter will have a much different tone and content than if a patent owner seeks to directly threaten a competitor and start the damages and liability clocks as early as possible. Business goals can also influence the right time to send a letter. An earlier letter may capture more royalties, incentivizing patent holders to send their letters as soon as possible. But sending the letter later will reduce the time an infringer has to respond with a DJ action.

For the language of the letter, the patent owner must carefully construct its charge of infringement. Given that courts look to the totality of the circumstances, including circumstances beyond the cease-and-desist letter, no article can provide unassailable guidance for every situation. Indeed, in situations where the parties have a long history of adversity, a court might find a relatively benign cease-and-desist letter tips the balance in favor of DJ jurisdiction. That same letter might be insufficient to trigger DJ jurisdiction in a different context.

Some framing techniques that could weigh against creating DJ jurisdiction include statements requesting information about the product to determine infringement, to open discussions about potentially infringing activities or licenses, or to begin discussing abating infringement. In the correct context, these types of statements could put someone on notice that they are infringing, and therefore constitute a charge of infringement for notice purposes, without coming across as a threat of filing suit that meets the MedImmune requirements for DJ jurisdiction. If the accused infringer follows up to seek additional information, the patent owner may be able to share claim charts or other information without creating DJ jurisdiction.32 The better practice, however, is first to seek an agreement with the accused infringer that the additional information will be used only to advance the discussions between the parties and cannot be used to support DJ jurisdiction. If the accused infringer will not agree, the patent owner will need to assess its risk in the totality of the circumstances at that point in time and decide whether it is worth the risk of sending the additional information without an agreement.

Ultimately, absolute risk avoidance may not be attainable in this area. But having a thorough appreciation of the competing legal and practical concerns, as well as a detailed understanding of the related case law, will help patent owners minimize risk while still achieving their goals.


1 549 U.S. 118 (2007).

2 While some believe "cease-and-desist letters" literally tell the recipient to cease and desist their infringing conduct, attorneys often use the term to encompass letters with less threatening language, such as letters providing notice of a patent or other pre-suit communications.

3 MedImmune, 549 U.S. at 127 (quoting and citing Maryland Cas. Co. v. Pac. Coal & Oil Co., 312 U.S. 270, 273 (1941)).

4 SanDisk Corp. v. STMicroelectronics, Inc., 480 F.3d 1372, 1382 (Fed. Cir. 2007).

5 Hewlett-Packard Co. v. Acceleron LLC, 587 F.3d 1358, 1362 (Fed. Cir. 2009).

6 3M, 673 F.3d at 1378-79.

7 See id.; HP, 587 F.3d at 1361-64. In HP, the court also found the patent owner's status as solely a patent licensing entity to be significant. HP, 587 F.3d at 1364.

8 HP, 587 F.3d at 1361-64.

9 Element Six U.S. Corp. v. Novatek Inc., No. 14-0071, 2014 WL 12586395 (S.D. Tex. June 9, 2014).

10 See id.

11 Micron Tech., Inc. v. Mosaid Techs., Inc., 518 F.3d 897 (Fed. Cir. 2008)

12 Assoc. for Molecular Pathology v. U.S. Patent & Trademark Office (Myriad), 689 F.3d 1303 (Fed. Cir. 2012), rev'd on other grounds, 569 U.S. 576 (2013).

13 35 U.S.C. § 287.

14 SRI Int'l, Inc. v. Advanced Tech. Labs., Inc., 127 F.3d 1462, 1470 (Fed. Cir. 1997).

15 Id.

16 SRI, 127 F.3d at 1470. While this case was before MedImmune, this take on the policies has continued to be referred to after MedImmune. See, e.g., PCT Int'l, Inc. v. Holland Elecs. LLC, No. CV-12-01797-PHX-JAT, 2015 WL 5210628, at *15 n.13. (D. Ariz. Sept. 8, 2015).

17 The Federal Circuit in Gart v. Logitech, Inc., compared the policies that differentiate the two doctrines without clearly defining the difference, but such a comparison has not been performed post-MedImmune. 254 F.3d 1334 (Fed. Cir. 2001).

18 See, e.g., Ceeco Machinery Manuf. v. Intercole Inc., 817 F. Supp. 979 (D. Mass. 1992).

19 See, e.g., Componex Corp. v. Elecs. for Imaging, Inc., 58 F. Supp. 3d 912, 921 n.12 (W.D. Wis. 2014) (criticizing Ceeco).

20 PCT, 2015 WL 5210628.

21 Id.

22 Gart, 254 F.3d 1334.

23 Id.

24 PCT, 2015 WL 5210628.

25 Fujitsu Ltd. v. LG Elecs., Inc., 620 F.3d 1321 (Fed. Cir. 2010).

26 Id.

27 Id.

28 Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007); see also Ashcroft v. Iqbal, 556 U.S. 662 (2009).

29 9 V.S.A. §§ 4197(a) ("A person shall not make a bad faith assertion of patent infringement.").

30 9 V.S.A. §§ 4197(b)(1)-(8).

31 9 V.S.A. §§ 4197(c)(1)-(6).

32 See, e.g., Element Six U.S. Corp. v. Novatek Inc., No. 14-0071, 2014 WL 12586395 (S.D. Tex. June 9, 2014).

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