It is so jarring: as a small business owner or entrepreneur, you are just going about your life and WHAM!--a so-called letter of the law steps in and tells you "You've done something wrong." Usually coming from a law firm with two or more surnames in the title, this "cease and desist" letter, sometimes referred to as a demand or order, is meant to shock you, scare you, shake you down. While you may not know what it is, chances are you that have a good idea of why you got one. You probably just don't know what you’re supposed to do about it.
What it is: A cease and desist letter is an attempt to stop you from engaging in specific business practices. The “cease” part wants you to stop whatever it was that the letter says you are doing and the "desist" portion wants you to never do this thing again. The "letter" part is what is most small business people get hung up on: "Oh my God! Is this just a letter or an official document? Do I have to shut down operations? Change my logo or my company name? Do I have to hand over my 'secret sauce' and hope this other company buys me out? Help!"
What Does This Mean: On the other hand, you might say, “Yeah, so what?” A cease and desist order does not come from a higher authority--it is NOT a legally binding document, nor is it official. You could take this fancy embossed linen document and line your bird feeder with it if you wanted to. While a cease and desist letter may be used in a lawsuit to demonstrate that you have been given "notice" of your supposedly wrongful acts, this letter is just the (sometimes very questionable) legal opinion of one lawyer who has a client who doesn’t like something that you are doing. That’s it!
However, if someone has gone to certain lengths to have a cease and desist letter drawn up, this could mean that they must be pretty serious about their views. Or not. For companies and people with deep pockets, the cost of having an intimidating demand sent to you is negligible. While there are times that a C&D is appropriate, it is often misused to attempt to bully the "little guy." Imagine the muscle-bound athlete on the beach putting the 90 pound weakling in a headlock: the weakling may have some cash or a sandwich to cough up, and the consequences are nil if the weakling has nothing to offer. That's the nature of a cease and desist. A small price to pay for a potentially big reward of shutting you down. Don’t be freaked out over aggressive language that this lawyer is using in their letter; corporate lawyers have clients to impress.
What Should I Do: If you do get one of these letters, an attorney can guide you through a response. It’s also wise to start thinking about gathering evidence to counteract the language of the letter. If you can bring a lot of those things--dates of incorporation/organization, the first public appearance of your company name or logo, etc.--in to your first meeting with your attorney, then you are a lot more likely to deal with this proactively. One point to remember is to try your best to divorce yourself from emotion when you collect your evidence. An attorney needs just the facts; the argument comes later.
When all is said and done, an equally well-crafted response letter from an attorney can nip the potential conflict in the bud.