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The Cease & Desist letter

Once you have completed your investigation and reviewed the potential remedies, it's time for your attorney to contact those persons who have breached the NDA or violated trade secret laws-for example a competitor who has bribed an ex-employee to breach the NDA. The first volley is a warning, sometimes referred to as a cease-and-desist letter, that accomplishes the following:

  • informs the parties of the existence of the trade secret (without disclosing it) and provides evidence of the ownership of the trade secret,

  • requests that the alleged misappropriation be stopped immediately and that all physical evidence of the trade secret be returned immediately. If the secret is being used in a commercial process or product, the letter requests a halt to any further commercialization of the product or process.

  • may request payment or a royalty for past misappropriation. Alternatively, you may offer the company another option, to pay ongoing royalties and continue selling the product or process under an agreement known as a license.

You may get a letter back from the company, offering to discuss the issues or if the other company reasonably believes you're going to sue it for misappropriation, it may instead bring a lawsuit asking for "declaratory relief." It may ask the court to determine the validity of a nondisclosure agreement or of a trade secret and whether it has been misappropriated. However, if your letter did not threaten a lawsuit, but proposed resolving the dispute some other way-for example, by requesting arbitration or by granting a license-the company has no right to request declaratory judgment.

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