Competition law, e. g. the law on unfair competition, stipulates the rules to be observed by market players. These rules should guarantee the conditions for a fair competition. Cease and desist claims are governed by §§ 3 to 7 of the Unfair Competition Act. Normally, in a first step cease and desist claims are claimed in a so-called „warning letter“. Such a warning letter is to be directed to the infringer. The infringement is specified and the infringer is requested to cease and desist from committing any unfair act. Normally a cease and desist letter is attached to such warning letter. A cease and desist letter is a document sent to an individual or business to halt purportedly illegal activity („cease“) and not take it up again later („desist“). The letter may warn that if the recipient does not discontinue specified conduct, or take certain actions, by deadlines set in the letter, that party may be sued.
In this letter the extent of the infringement is described. For the purpose of safeguarding the cease and desist declaration, the infringer undertakes to pay a contractual penalty for any infringement.
Due to the considerable consequences that may result from an anticompetitive violation, the deadline to respond to a cease and desist letter is very short. In most cases the deadline is not exceeding one week. The infringer is also informed that if the cease and desist letter is not provided within the specified time limit, a legal enforcement of the claim will be made in court. It is important for the infringer to observe the time period because a cease and desist claim can also be enforced by means of an interim injunction. In order to successfully pursue a cease and desist claim you need a „legitimate interest to sue“. The legitimate interest to sue persists as long as the party sustaining damage is not adequately secured against any recurrence of the anticompetitive violation. If the recipient of a cease and desist letter has made a corresponding declaration, there is no risk of recurrent infringement and no further legitimate interest to sue.
If the infringer considers the cease and desist letter to be justified he can sign same in order to solve the conflict or he may also set up a letter on his own which must, however, also contain a penalty clause in favour of the party sustaining damage. If the cease and desist letter is set up by the infringer himself, it should be carefully perused by the recipient before it is signed.
If the party sustaining damage is represented by a lawyer, the cease and desist letter often does include claims to information as well as claims for damages. If such a letter is signed by the infringer, he is obliged to pay the costs for the lawyer which are fixed in accordance with the value of the disputed matter.
Before signing such cease and desist letters same should be carefully examined with regard to contents, extent and additional obligations bearing in mind the high amounts involved in intelletcual property matters.