California Court of Appeal Reverses Trial Court’s Granting of anti-SLAPP Motion Based on Commercial Speech Exemption

In BioCorRx, Inc. v. VDM Biochemicals, Inc., Case No. G061535, the Court of Appeal of the State of California Fourth Appellate District held that statements or representations made by a person or company for the purpose of promoting its goods and services through the sale of its securities to investors was not within the purview of the anti-SLAPP statute California Code of Civil Procedure § 425.16.

BioCorRx, Inc. (“BioCorRx”) was a publicly traded company primarily engaged in the business of providing addiction treatment services and related medication. VDM Biochemicals, Inc. (VDM) specializes in the synthesis and distribution of chemicals, reagents, and other specialty products for life science research. It owned a patent named VDM-001, which was a compound with potential use as a treatment for opioid overdose.

In September 2018, VDM and BioCorRx entered into a Mutual Nondisclosure & Confidentiality Agreement (the NDA), which restricted each party’s disclosure of confidential information as they discussed forming a business relationship. A month later, VDM and BioCorRx signed a Letter of Intent to Enter Definitive Agreement to Acquire Stake in Intellectual Property (the letter of intent). The letter of intent memorialized the parties’ shared desire whereby BioCorRx would partner with VDM to develop and commercialize VDM-001. BioCorRX issued several press releases that allegedly made misrepresentations and improperly disclosed confidential information about a treatment it was developing for opioid overdose.

BioCorRx and VDM never signed a formal contract concerning VDM-001. Their relationship eventually soured. BioCorRx filed a complaint against VDM; VDM cross-complained. In response, BioCorRx filed the anti-SLAPP motion, seeking to strike all the allegations from the cross-complaint concerning the press releases based on the assertion that they were a research and development company because nearly all of BioCorRx’s revenues and expenditures were from research and development grants, and only a small portion of funds were spent on other sales-related costs.

The Court of Appeal disagreed, stating that BioCorRx was not a research and development company, rather a health services company that conducts research and development to further its treatment programs and line of commercial medications. Thus, the Court found that the press releases fell within the commercial exemption of Cal. Code Civ. Proc. § 425.17 because the portions of the press releases at issue concerned BioCorRX business operations and were communicated to investors in order to promote BioCorRx’s goods and services through the sale of its securities.

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October 26, 2023