Chinese IP Law Updates
March 12, 2018

Pros & Cons of Cease & Desist Letter Use

Recently Mr. Eric Su, partner at HFL, and Ms. Jessica Li, patent attorney at HFL, have jointly shared their professional views by writing an article on PATENT LAWYER magazine about the pros and cons of sending cease and desist letters, talking about another recent court case that granted Shuanghuan Auto RMB 16 million (approx. to US$ 2.5 million) in monetary compensation.

In recent years, we have witnessed several cases in which sending a Cease and Desist letter turns out exposing the right-owner to a litigation case. In the end, a person who intends to protect his/her rights may have to pay damages or face an unfavorable court decision as to the counterparty’s infringement. By exploring the Honda vs Shuanghuan Auto case, this article reviews the court decision that granted Shuanghuan Auto the monetary compensation and focuses on how to deal with sending C&D letters appropriately.

The authors have looked at the two rounds of C&D letters sent to the dealers and business partners of Shuanghuan Auto, by Honda. By also reviewing the Supreme Court opinion on the case and understanding who is entitled to make use of C&D letters, we can understand better how to approach similar cases in the future. In addition, it is important to take into consideration the right time of when to send a C&D letter, the recipient, and the contents included in it. The sending of these two rounds of letters brought different results for HONDA in terms of protection of its rights, as the timing and recipients of its letters changed. Therefore, special attention should be paid to these two factors, which led to a different duty of care in different cases.

The conclusion reached by the authors is that sending a C&D letter is an efficient and low-cost mean of rights protection. It is significantly beneficial to right-holders when used properly, protecting their rights in a timely manner without the burden of complex and tiring court proceedings. However, when sending letters parties should check in advance whether they are entitled to do so and consider what to include in those letters, regarding the timing and the target, in order to avoid legal risks in their legal action.

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