Correction: This report has been changed to reflect that the appeals court affirmed the lower court’s refusal to dismiss a defamation claim that Christopher Cole brought against Patricia A. Meyer & Associates in San Diego and two of its principals, and to note that, according to Cole’s attorney, he did not contribute money to the securities settlement against Peregrine Systems Inc.

In a ruling that alarmed the plaintiffs attorneys, a California appeals court has found that the co-founder of a software company can pursue a malicious prosecution action against a group of attorneys who had sued him for securities fraud.