4-2 CEASE-AND-DESIST LETTER

• Jurisdiction: United States

4-2 Cease-and-Desist Letter

Most trade secret cases begin not with the filing of the complaint or petition but with a pre-suit cease-and-desist letter. The main purpose of this letter is to put the potential defendant on notice of the threat of a trade secret misappropriation claim. Depending on the circumstances, pre-suit demand letters can often lead to an early settlement, thus obviating the need to file the lawsuit in the first place. If a settlement does not result, however, at the very least, a cease-and-desist letter ensures that the potential defendant is on notice of the claim and is thus required to retain evidence or risk suffering spoliation sanctions discussed below.

There are several circumstances in which you should strongly consider sending a pre-suit demand letter on behalf of your client. One is when an employee leaves to work for a competitor. If this happens, you or your client could send a letter to the departing employee and perhaps to his or her new employer—regardless of whether that employee is suspected of taking trade secret information. This letter should set forth any continuing contractual or other obligations under which the departing employee remains, including any confidentiality obligations. It should also explain to the departing employee the obligation not to use or disclose any trade secret information obtained during his or her employment. The letter must walk a fine line with respect to identifying the trade secrets—specific enough so the former employee is able to understand his or her obligations but not so detailed as to risk the argument that the trade secret has been destroyed through disclosure.

In the situation where the client thinks its trade secrets have been misappropriated by a former employee or otherwise, a cease-and-desist letter can be used to request that the unauthorized use of the trade secret end immediately. The letter should also request the return of any protected documents if it appears that the former employee still has (and may potentially use) such documents. The cease-and-desist letter should also include notice to the potential defendant to preserve any evidence relating to the misappropriation. Finally, the demand letter should provide the potential defendant with a specific deadline by which to respond to any demands. A model cease-and-desist letter is included in the Appendix at the end of this book.

An example of the issues that can arise in a pre-suit cease-and-desist letter is found...