As an intellectual property attorney, I’m a firm advocate of building an IP portfolio including multiple assets. Patents, trademarks, copyrights, and trade secrets provide significant competitive advantages for companies of all sizes. To use a patent or trademark, however, the owner must assert infringement in some capacity. A typical first step is to send a cease & desist letter. However, owners should be careful when sending enforcement letters to third parties. This week, Nintendo faced backlash over its cease & desist letter policy, providing a cautionary tale for IP asset owners.
Intellectual property provides negative rights for the asset owner. A negative right gives an owner the right to prevent others from operating within a certain space. As such, a patent or trademark does not grant the owner with the right to sell a product; instead, patents and trademarks provide mechanisms for the owner to prevent infringement of its IP rights. This prevention often starts with the cease & desist letter.
Nintendo’s Aggressive Cease & Desist Tactics
Nintendo is known for its aggressive enforcement of its intellectual property rights. As a famous company with many iconic IP assets, Nintendo faces a great deal of infringement. For example, third parties often sell clothing items, stickers, bags, and other items including famous Nintendo characters. Without obtaining Nintendo’s prior permission, such sales represent trademark and/or copyright infringement. Nintendo typically shuts these operations down, such as by sending a cease & desist letter.
This week, however, a story surfaced that Nintendo sent a cease & desist letter to a charitable operation. Nintendo owns a trademark for its JOY-CON, the controllers used in connection with the Nintendo Switch console. In September, a charity benefiting suicide awareness sold over $30k worth of custom controllers including the term JOYCON BOYZ. The charity raised money in light of a death by suicide by a popular online Nintendo streamer. However, after receiving the cease & desist letter, the organizers were stuck with products they couldn’t sell.
Should Nintendo Change its IP Enforcement Policy?
As a trademark owner, Nintendo operated within its rights by sending the cease & desist letter. However, did this strategy represent Nintendo’s best option? Cease & desist letters can shut down an act of infringement without requiring lengthy and expensive court intervention. However, under the circumstances, Nintendo faces a huge PR backlash because it shut down a suicide awareness charity for the sake of IP infringement.
At the end of the day, Nintendo must protect its intellectual property rights, or risk losing those rights. However, rather than sending a harshly worded cease & desist letter, a better strategy might have been a softer “warning” letter. Moreover, Nintendo could have earned goodwill by donating to the charity while making its IP rights clear. As it stand, though, Nintendo provides a cautionary tale of the potential problems with sending a cease & desist letter.
Under a worst case scenario, the receiving party can file a declaratory judgment lawsuit to have a judge rule on the infringement. However, bad PR can also follow an aggressive enforcement policy.
Some legal rights give you a mechanism to perform an action, and are referred to as “positive” rights. For example, obtaining a driver’s license gives you the right to drive a car. Intellectual property rights are “negative” rights, in that they do not give you a right to make or sell a product. The right to make or sell a product exists outside of a patent or trademark. Instead, a “negative” right gives the owner the right to prevent others from making or selling a product that is too similar to your IP right, which is proven via an infringement analysis.