(L to R) Esha Bandyopadhyay, Matthew Berntsen, and Meaghan Annett of Fish & Richardson (Photo: Courtesy Photo)

More than half of the states in the United States have enacted anti-SLAPP legislation, or laws to prevent a “strategic lawsuit against public participation.” These laws are intended to protect First Amendment rights of expression and free association, particularly against plaintiffs seeking to use a lawsuit to intimidate defendants into silence. While the anti-SLAPP laws in some states have not had significant impact, others offer a pathway to early dismissal.

Anti-SLAPP legislation provides a variety of relief to such defendants, including staying discovery while an anti-SLAPP motion is pending and awarding attorneys' fees and costs if the motion is successful. Depending on the venue, an anti-SLAPP motion may be brought as a motion to dismiss or a special motion to strike the complaint. In all states, motions based on an anti-SLAPP statute must be filed early in the litigation, usually well before the start of costly and time-consuming discovery.

The Role of Anti-SLAPP Laws in Trade Secret Litigation

Parties accused of stealing trade secrets sometimes turn to anti-SLAPP laws in an effort to convince a court to dismiss claims of misappropriation, contending that use of the allegedly misappropriated trade secrets is a form of protected speech or activity under the First Amendment. Because the scope of anti-SLAPP laws is different in each state, both the substantive law and the procedures available to a defendant to use such a statute varies depending on where the suit was brought.

Some states, like California, have rarely seen a trade secret claim dismissed as the result of an anti-SLAPP motion. In Texas, however, defendants have historically achieved much greater success in early dismissal and recoupment of fees. Now that stands to change. Texas recently passed legislation narrowing the application of anti-SLAPP laws. (The new legislation goes into effect on September 1.) Among other things, the amendments remove trade secret and employer-employee cases from the anti-SLAPP laws. This may be a harbinger of a national rollback of anti-SLAPP protections.

In California, If You Can Bring a Trade Secret Claim, You Can Likely Overcome an Anti-SLAPP Motion

California's civil code offers some of the broadest protection for petitioning and speech related to public issues. Cal. Civ. Proc. Code §425.16 et seq. Although a party bringing a special motion to strike under California's anti-SLAPP statute has the initial burden of showing that the speech at issue relates to a public concern, courts tend to construe this requirement in favor of the moving party because California's anti-SLAPP statute expressly states that it is to be “construed broadly.” Cal. Civ. Proc. Code §425.16(a). Accordingly, if a movant satisfies its initial burden, the burden shifts to the nonmoving party to show a probability of prevailing on the claims in its complaint.

Despite what appears to be a significant advantage for plaintiffs, however, defendants in California are unlikely to prevail in disposing of trade secret claims by invoking anti-SLAPP laws. Earlier this year, for example, in Anheuser-Busch Cos. v. Clark, the Ninth Circuit found that a plaintiff merely needs to demonstrate a reasonable probability that it would ultimately prevail on its trade secret claims. Specifically, identification of a trade secret, reasonable efforts to maintain secrecy of that trade secret, and the defendant's acquisition of that secret through improper means, were deemed sufficient to overcome an anti-SLAPP motion.

As plaintiffs in California are already subject to some of the toughest requirements for early identification and disclosure of trade secrets, perhaps these requirements effectively preempt anti-SLAPP claims. At a minimum, they appear to force plaintiffs into a state of preparedness prior to filing suit that then prepares them for anti-SLAPP motions as well.

Indeed, it would seem that a plaintiff attempting to overcome an anti-SLAPP motion in California has little, if any, additional burden than the basic requirements to bring the trade secret cause of action in the first place. Put another way, to prevail on its anti-SLAPP motion, a defendant would have no less burden than establishing a less than reasonable probability that the plaintiff will prevail on its trade secret claim. Anti-SLAPP motions are not, therefore, a terribly effective—and certainly not a very attractive—mechanism to dispose of trade secret claims in California.

Even Texas Is Narrowing the Application of Anti-SLAPP Laws

Texas, on the other hand, has historically been at the other end of the spectrum with respect to utilizing anti-SLAPP suits in connection with disposing of trade secret claims. In 2011, the Texas legislature enacted the Texas Citizens Participation Act (TCPA), which protects speech or activities connected to a public concern. Tex. Civ. Prac. & Rem. Code §27.001–.011. The law was intended to protect against protracted litigation or assertion of meritless claims that curbed public participation; however, the 2011 statute was so broad that it became routine to raise this defense in all trade secret cases, and even in other cases, such as family law. For example, in Elite Auto Body v. Autocraft Bodywerks, the Texas Court of Appeals affirmed dismissal of trade secret claims, stating that dismissal was “consistent with the manner in which Texas courts have generally applied the TCPA when the 'communication' in question is alleged to come within one of the other 'historic and traditional' categories of speech whose content may be regulated without violating the First Amendment.”). Since Texas only requires a simple notice style of pleading and does not require early identification or disclosure of trade secrets, it is not unusual for a plaintiff to file suit without developing a full grasp of the misappropriation, thereby rendering the plaintiff susceptible to anti-SLAPP rules. A successful defendant is then entitled to fees and might even obtain sanctions under existing law.

To combat the perceived abuse of anti-SLAPP motions, earlier this year the Texas legislature overwhelmingly passed H.B. 2730, which narrows the application of the TCPA with a long list of exceptions for cases of certain types. Among these exceptions are exemptions for trade secret litigation and disputes arising from the employer-employee relationships (e.g., non-competes). Governor Greg Abbott signed the new changes into law on June 2, 2019; they will become effective on Sept. 1, 2019.

Although the changes to the TCPA have not yet taken effect, soon after Governor Abbott signed them into law, a Texas appeals court narrowed the application of the TCPA. In Rose v. Scientific Machine & Welding, a former employee accused of misappropriating trade secrets by his ex-employer brought a motion to dismiss based on the anti-SLAPP statute. While the appeals court found that the TCPA did apply, it ultimately denied the employee's motion to dismiss, finding that the activity at issue fell under an exemption to the TCPA. Defendants in Texas may, therefore, start seeing greater difficulty if attempting to dispose of trade secret claims through this mechanism.

Looking Toward the Future

Anti-SLAPP laws across the states are far from uniform. In fact, no two states have identical anti-SLAPP laws. It is difficult, therefore, to systematically assess the likelihood of a defendant's success in using an anti-SLAPP motion to dispose of a trade secret claim absent case-specific analysis. However, if even states like Texas, which had perhaps the broadest anti-SLAPP laws, are now narrowing its anti-SLAPP laws, this may signal that the mechanism will slowly disappear over time. At the very least, the pendulum appears to be swinging toward plaintiffs.

Esha Bandyopadhyay, a principal in Fish & Richardson's Silicon Valley office, has been practicing intellectual property and technology-related commercial litigation and counseling in the Bay Area for close to two decades. 

Matthew C. Berntsen is an associate in Fish & Richardson's Boston and New York offices and a computer scientist. He is an intellectual property litigation generalist, emphasizing complex intellectual property litigation.

Meaghan Annett is a summer associate with Fish & Richardson. She attends Boston College Law School.