Toast's Counterclaims Survive Anti-SLAPP Challenge in Gratuity Patent Dispute

BOSTON (LN) — U.S. District Judge Julia E. Kobick on Wednesday denied Gratuity’s special motion to dismiss counterclaims for abuse of process and unfair competition, ruling that the claims are not based solely on petitioning activity because they also target alleged pre-litigation coercive tactics.

The dispute stems from a years-long effort by Gratuity to be acquired by Toast, a provider of restaurant technology platforms. According to Toast’s counterclaims, Gratuity repeatedly sought an acquisition starting in 2019, sending an email to Toast’s CEO about an “acquisition opportunity” and requesting meetings that Toast declined.

After those overtures failed, Toast alleges Gratuity turned to “repeatedly asserting meritless claims of inventorship and ownership of” gratuity distribution algorithms. In June 2022, Gratuity’s counsel sent a demand letter claiming infringement of two patents and seeking “an appropriate resolution of [Toast's] past and ongoing infringement of the Patents.”

Gratuity subsequently filed two lawsuits against Toast, one in Massachusetts alleging patent infringement and breach of non-disclosure agreements, and another in Florida alleging trade secret misappropriation. After the Florida court transferred the trade secret case to Massachusetts, Judge Kobick consolidated the two actions.

Gratuity moved to dismiss Toast’s counterclaims under the Massachusetts anti-SLAPP statute, arguing the claims were based solely on its right to petition the courts.

Kobick rejected that argument, holding that Toast’s counterclaims are premised in part on conduct that occurred before Gratuity filed its lawsuits. The judge noted that prelitigation demand letters do not constitute petitioning activity under the anti-SLAPP statute.

“Because Toast has premised its Chapter 93A counterclaim in part on conduct that occurred before Gratuity's filing of its lawsuits, the counterclaim seeks redress for substantial non-petitioning activity and is therefore not subject to dismissal,” Kobick wrote.

The judge applied the same reasoning to the abuse of process counterclaim, noting that Gratuity allegedly used the threat of baseless patent claims to coerce Toast into acquiring its business.

“Given Gratuity's allegedly improper prelitigation conduct, Toast's abuse of process counterclaim cannot be dismissed,” Kobick wrote.

The case remains pending in the U.S. District Court for the District of Massachusetts.