Court Refuses Anti-SLAPP Dismissal Of Chapter 93A Claim Tied To Patent Demand Letters

A recent Massachusetts federal court decision highlights a limitation on a Massachusetts statue prohibiting strategic litigation against public participation (the anti-SLAPP statute) as used in business disputes. In Gratuity Solutions, LLC v. Toast, Inc., the District of Massachusetts declined to dismiss a Chapter 93A counterclaim alleging that patent infringement threats and related litigation were used as leverage to pressure a potential acquisition. The ruling demonstrates that anti-SLAPP protection may not apply when an unfair competition claim is based not only on the filing of lawsuits, but also on pre-suit demand letters, infringement allegations, and other alleged coercive conduct occurring outside the courtroom.

Beginning around 2019, Gratuity Solutions, LLC (Gratuity) allegedly sought to be acquired by Toast, Inc. (Toast). After acquisition overtures in 2019 and 2021 failed, Gratuity allegedly began asserting meritless patent infringement claims against Toast. In June 2022, Gratuity allegedly sent Toast a demand letter threatening infringement of two patents and seeking “an appropriate resolution” for the alleged ongoing infringement.

Gratuity filed two lawsuits against Toast — one in September 2022 in the District of Massachusetts and a second in the Middle District of Florida during a stay of the first case. Toast characterized both suits as baseless actions filed to improve settlement leverage and pressure Toast into an acquisition. Toast’s core theory was that this conduct constituted “commercial extortion” — using coercive or extortionate tactics to extract undeserved concessions from another business — which may be actionable under Chapter 93A.

Gratuity filed a special motion to dismiss the Chapter 93A counterclaim pursuant to the Massachusetts statue prohibiting strategic litigation against public participation (the anti-SLAPP statute). Gratuity argued that Toast’s Chapter 93A claim was based solely on Gratuity’s petitioning activity — specifically, the filing and prosecution of its two lawsuits — and therefore should be dismissed under the statute.

The court applied a two-stage anti-SLAPP framework but only reached the first stage. At stage one, the moving party (Gratuity) bears the burden of making a threshold showing that the claims against it are based on its petitioning activities alone. Because the court found that Gratuity failed to meet its burden at stage one, it did not reach stage two of the anti-SLAPP analysis (which would have required Toast to show that Gratuity’s petitioning activity was devoid of reasonable factual support and caused actual injury).

The court denied the motion after stage one for several reasons. First, the court held that Toast’s alleged June 2022 demand letter and other pre-litigation assertions of patent infringement claims did not constitute petitioning activity under the anti-SLAPP statute. According to the court, filing lawsuits is quintessential petitioning activity, but pre-suit demand letters and threats generally are not. Second, the court found that the Chapter 93A claim was a “mixed” claim. Because Toast’s counterclaim rested on both petitioning activity (the lawsuits) and substantial non-petitioning activity (the pre-litigation threats and coercive tactics), it did not satisfy the “solely based on petitioning activity” requirement for anti-SLAPP protection. Third, the court focused on legislative intent. The court noted that the legislature did not intend the powerful procedural protections of the anti-SLAPP statute to apply to such mixed claims and noted that these claims should instead be addressed in the ordinary course of litigation.

The case illustrates a possible limitation of anti-SLAPP protection in the Chapter 93A context: where a plaintiff’s unfair competition claim rests not only on an opponent’s filing of litigation but also on allegations of pre-litigation threats, demand letters, and other coercive conduct, the claim may not be dismissed under the anti-SLAPP statute. Parties alleging “commercial extortion” theories under Chapter 93A may therefore survive anti-SLAPP challenges by grounding their claims in certain facts that exist outside of litigation.

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