When seeing similar trademarks or trade dress employed by a third party, companies often immediately react with a demand letter requiring the target to “immediately cease and desist” its use of the IP and threatening litigation for the target's failure to do so.  Such letters are often ill-advised.

First, the company sending such a letter must have a well-considered strategy.  What will it do if the letter is ignored?  If the answer is not that it will litigate as promised (or at least implied) in the demand letter, then it probably is not advisable to send the letter at all.

Moreover, it must be prepared for the litigation that could be triggered even if it doesn't file suit itself.  Indeed, a resulting declaratory relief action filed by the target can result not only in unwanted litigation with the attendant costs and risk of damage and fee awards, but, moreover, litigation in an inconvenient forum, and can open it to both litigation expenses and (though unlikely) potential damage and fee awards.

At the end of the day, demand letters form an important part of a company's trademark enforcement strategy.  But they must be just that—a part of a fully developed reasoned strategy rather than a knee-jerk reaction to perceived infringement.