What to Do If You Get a Cease and Desist Letter in eCommerce

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Before I begin I want to kick things off stating that I AM NOT A LAWYER. If you got a Cease and Desist letter from an opposing attorney, seek true legal advice. When we were marketing eCommerce products, we had a situation with a huge company that could have resulted in a serious lawsuit.

Luckily, however, it did not evolve into a serious crisis. We can safely say that the crisis was averted. First and foremost, if you're marketing eCommerce products, I highly recommend that you stay away from copyrighted, trademarked and patented products. Even if you are in a country outside of where the copyright, trademark or patent originated from, you can still end up in some hot water.

Yes, they are easy to sell and there are a lot of marketing assets available for you to use on the fly. You don't need to do much marketing because a lot of these products are already known to consumers. But, think about what you are doing to this world. You are taking someone else's hard work and simply exploiting it to make a quick buck. Plus, you can't build a sustainable business out of it.

Forget the legal implications, the moral implications should be enough to keep you away from this model. But…some people, even “gurus” still do it. Why? Because it's easy money and pumps up huge revenues.

Example 1

Like 5 Million Dollars in your first year.

People will say to ignore C&D letters and throw them out. That is, until you get one from a gigantic corporation threatening to sue the living daylights out of you. Let's take a common situation that someone by the name of  Jared Goetz got himself involved in.

Well he popped up on my newsfeed and I was wondering why he is selling courses. Jared markets his company called eCom Hacks Academy selling courses on how to get rich with his methods of “dropsurfing”. Yes, he coined the term “dropsurfing”. I haven't taken his course nor do I know anything about him, except what I'm going to tell you. But,  I'll let you be the judge, about his sales methods.

A quick Google search on him turned up a very interesting legal case. Looks like he really pissed a big company off. He did so by violating a patent. Like straight up copying and slapping your own logo on a product. It looks like his store was called The Gadget Snob, which is no longer active. What he did is like getting an iPhone and changing the apple to a peach and calling it an iPeach.

Honestly, I have no idea what Jared did or how much he made, but I can say that I would be scared shitless if I received a lawsuit to the extent he did.

Jared Goetz's case is filed in the United States District Court that claims that Jared is the Defendant of the case. Apparently, he violated someone's rights to a product by selling the inflatable, portable lounger that we see on AliExpress everywhere. You know, the lounger that people love having at festivals, concerts or basically any outdoor event. A really novel and unique product. It's enticing to sell, but a big no no. It will get you sued really fast. The parent company, Fatboy USA, LLC, keeps a close eye on infringers, especially on Facebook.

Again, I have no idea what the result of the lawsuit was, or if they settled etc. All I know and all I am sharing is that there was a lawsuit.

Fatboy holds their products near and dear and will go after anybody who tries to compete with them on the same product.

We had a similar situation, but we only received a C&D letter. I'm sure Jared received multiple letters before he created his branded store “Dumbo Lounge Sacks, LLC”. Again, I no nothing about this person, nor do I know about his business practices, but from his eCommerce game, it looks like he marketed a patented product that landed him into legal hot water.

Now, I imagine this man didn't care about the C&D and continued on as business as usual, again I don't know it's just a guess. Eventually, leading up to a full blown legal case. I have no idea, but I am assuming a company would send out an initial C&D to scare the living daylights out of you to stop selling their product. Then, if you ignore, they summon you to court. And yes, you can get summoned even if you are international.

Example 2

A while ago I worked at a cell phone refurbishing company that was doing mid 7 figures on eBay selling “new” Motorola Razr phones. They were purchasing farted out, damaged phones, refurbishing them and selling them like new on eBay. This went on for years before anything happened. I mean years. My friend ended up making multiple millions. But one day, he was sitting at work and got stormed by ICE and FBI for selling these phones.

All of the employees got handcuffed and all his property, bank accounts, cars, houses and assets got seized. Everybody who was a company leader was brought in for questioning.

Long story short, it was a 2 year court battle that ended up costing him everything he ever made on the phones plus criminal charges filed against him for theft and a host of other damages and charges. As far as I know, he's still paying his settlement to Motorola.

So these things are real.

Our Story

Trademarks, Copyrights and Patents are designed to protect the creator of his or her original assets. If we didn't have them, everything would eventually get stolen and ripped. I mean, it still does, but we still buy original Apple iPhones, even though there are plenty of knock offs on the market. It's tasteless, and frankly risky for you business.

So what happened to us? We were marketing our product, getting ready to hit some super high numbers with manual bids and suddenly all our ads got disapproved one by one. It's like our castle just crumbled beneath our feet. Then, about 20 minutes later, we received a letter from this gigantic company.

I won't reveal the name because the situation isn't public, but I will reveal that it was a doll. Now, prior to selling anything we always look up trademarks, patents and copyrights. It just so happened that we didn't even think that a doll can be copyrighted.

Turns out a doll is considered a work of art in the form of a sculpture. That sculpture can carry a copyright with it. Therefore, it didn't need a trademark or patent, it had what it needed. And therefore, we thought we were fine. Until we got the letter.

So I'll outline step by step what to do in case you get a letter like this.

So Here's We Did In Case You Get a Cease and Desist Letter

1. Stay Calm

Do not freak out. Stay calm, cool and collected. Read through the letter thoroughly. Do not panic. Don't panic. Please keep your cool, everything will be ok. Just chill. Just stay super chill. Read through it and figure out what the people's demands are. Sometimes it's as simple as stopping the ads and returning any money that was made. Other times they want you to pay royalties. In our case, here's what they wanted from us.

Taking all the foregoing into account, the Infringing PRODUCT clearly violates COMPANY exclusive rights in the overall design and under the copyright laws of the United States, 17 U.S.C. § 101, et seq. Accordingly, we request that you immediately:

  1. cease promoting, displaying, distributing, offering for sale, and selling the Infringing PRODUCT;
  2. provide COMPANY with the name and address of the supplier and/or vendor(s) of the Infringing PRODUCT, as well as documentation reflecting the manufacture, importation, and sales to date of the Infringing PRODUCT;
  3. disclose the remaining quantity of the Infringing PRODUCT currently in inventory under your company’s control; and
  4. provide an accounting of all sales of the Infringing PRODUCT to date, and agree to compensate out client accordingly.

Yes, they wanted us to stop promoting it, disclose any quantity and tell them exactly how much we made from the product and just hand it over to their client.

Now, being in the Facebook Ads game, you can imagine we already paid Facebook for the marketing AND the AliExpress suppliers for the products. So we made a boatload in revenue, but not so much in profit as we were just starting to scale.

We were in quite a situation. No matter the response we send them, we already admit guilt. So do we ignore? Or do we respond? By responding we admit guilt, but by ignoring we risk a lawsuit like our friend Jared Goetz.

2. DO NOT RESPOND

Wait and think. Since you're calm, you need to stay calm. Do not stupidly respond to the opposing attorney or company in a hurry to get them off your back. They won't. First off, you're not an attorney and you have no idea what the language is. Second off, you have no idea what they have up their sleeves.

And third, anything you do share can be used against you in a court of law because you are not guarded by attorney-client privilege.

After speaking with some lawyer friends and explaining the situation, they advised me not to worry.

It's something that happens all the time, but it's probably a good idea to hire an attorney who specializes in trademarks, copyrights and patents. Armed with this knowledge, I decided to seek real legal advice.

So we decided to take the high road and fight fire with fire.

3. Hire an Attorney Hire the BEST Attorney You Can Afford

So we sought legal help from a local law firm that worked with various celebrities with Trademark and Copyright claims. After multiple meetings and thousands of dollars he advised us to stay cool and follow their orders. Because our volume was relatively low compared to the multi-billion dollar corporation, they probably wouldn't waste their time with us. Indeed, he was right in the end, but that was a scary road to take.

At first we were hesitant to provide this data as it would immediately solidify a case against us and provide the evidence they needed to sue the living daylights out of us. BUT, we only provided the documentation under a super secret pact called attorney-client privilege. Basically, by sharing this information, we wouldn't self incriminate.

We would share for the purpose of resolution and do so privately. In other words, this evidence could not be used against us if it went to court. That's a relief. At least the theory sounded nice.

4. Establish Attorney-Client Privilege and keep all mailings private

So we followed their orders and disclosed everything to them in neat spreadsheets. We showed them our P&L for this product and explained to them we really didn't profit. They wouldn't care, but still, it was worth telling them that we really didn't have the kind of money they did.

To be clear, this was not a criminal matter, but a civil one. This was a simple violation of someone else's rights and the volume wouldn't be high enough to go to any serious courts. Probably handled by a state court, certainly not a US district court, like our friend Jared Goetz.

5. Listen to Your Attorney

After months of emails and countless nail biting phone conversations, our attorney finally was able to resolve the issue. Our attorney called the plaintiff attorney and effectively befriended them as he knew them from a previous life.

Since they were relatively friendly, the plaintiff attorney was satisfied with our ceasing and desisting enough so that they didn't demand any finances, damages or court sentences. Indeed, we got LUCKY. I want to be clear, we were very lucky we didn't get slammed because we could have easily gotten some serious issues as a result of this situation.

It could have taken something from bad to worse. Significantly worse. Because we disclosed everything and we really were transparent with the opposing party, they decided to let us go.

Keep in mind they opposing party hired one of the largest law firms in New York to come after us. The letter they sent us probably cost them $2000-$3000 to just send. A corporation like that can afford anything. We can't.

6. Avoid the situation

Now comes the hard part. Avoid the situation in the future. Simply avoid it. Don't encounter it. Check the US Copyright DatabaseUSPTO and the US Trademark Office before scaling anything hard. Remember, just because you think you found a winner, it may be guarded by some nasty legal red tape that you just want to avoid for your own good.

It's better to be safe than sorry because you can kiss your eCommerce dreams goodbye if you mess up. As a side note, if you are international, there are international patents and you can still get a C&D and summoned to court. And if you're a United States resident and your violation is high enough, you could wind up with both a civil and criminal court case.

Please share your stories, questions and comments below.


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