Cease and Desist Letters in China: Balancing Intellectual Property Enforcement and Defamation Risks

Cease and desist letters are a common first step in enforcing intellectual property rights. However, improperly drafted or misused cease and desist letters can undermine their purpose or expose the sender to defamation claims. We advise rights holders to exercise caution when sending such letters.

In China, there are no strict requirements on cease and desist letter content or format. However, courts will consider factors such as the sender’s intent, the rights holder’s rights status, the letter’s specific content, and scope of recipients in determining whether the letter legally protects rights or infringes others’ rights. The key issue is whether the sender has met the appropriate duty of care.

The required duty of care depends on the circumstances. A recent ruling (2021)苏民终919号 by the Jiangsu High People’s Court discussed whether a licensee’s duty of care differs from a patentee’s, and whether cease and desist letters can be sent directly to infringing product users without first notifying the alleged infringer.

The case involved competitors SACA Precision Manufacturing and Wuxi Jingmei Precision Slide, two companies in China’s refrigerator slide rail market. SACA, the exclusive licensee of THK Co Ltd.’s patent, sent cease and desist letters to several of Wuxi Jingmei’s major clients, claiming that Wuxi Jingmei’s products infringed SACA’s licensed patent. Wuxi Jingmei sued SACA for commercial defamation, arguing the letters contained false statements.

The Chinese courts ruled in favor of Wuxi Jingmei, finding SACA liable for failing to exercise proper duty of care. The appellate court ruled that as licensees have less expertise about the specific patent than patentees, licensees generally owe a higher duty of care.

SACA sent the cease and desist letters directly to Wuxi Jingmei’s clients without first notifying Wuxi Jingmei. While no law strictly governs recipients or order of such letters, the appellate court found this approach failed SACA’s duty of care. Product end users are typically less able than manufacturers to judge infringement claims and more susceptible to influence from the letters.

When cease and desist letters are sent to parties beyond the alleged infringer, the sender assumes a higher duty of care due to the increased potential for harm. Rights holders should exercise extreme caution in such situations.