Daleiden, who founded the pro-life Center for Medical Progress in California, and investigator Merritt created a series of undercover videos last year alleging Planned Parenthood affiliate officials committed improprieties regarding fetal tissue and organs.
The officials are shown discussing the illegal marketing and sale of fetal tissue with Daleiden and Merritt, who posed as representatives of a mythical fetal tissue procurement firm. Planned Parenthood said any allegations it "profits in any way from tissue donation is not true" and that any money it received from labs were processing fees.
Daleiden and Merritt had been charged with a felony and a misdemeanor for tampering with government records and using fake IDs to enter a Planned Parenthood facility, the Houston Chronicle reported.
A grand jury convened in September 2015 to decide the case but had taken no action by December, when it was put on hold until last January. On Jan. 25, the jury indicted Merritt and Daleiden, who posted bond and went to court in February, rejecting plea deals.
A statement from the Chicago-based Thomas More Society firm, which provided Daleiden's legal counsel, said that the hold on the case, along with "other irregularities relating to acquisition of evidence" and "improper disclosure of secret grand jury matters" had compromised Daleiden's right to due process in Texas.
Because of these issues, the legal team filed a motion to dismiss the charges in April.
The court dropped the misdemeanor charge in June and Texas District Judge Brock Thomas dropped the felony charge July 26.
The Center for Medical Progress issued a strong statement hailing the decision to throw the case out as a First Amendment victory and a victory over Planned Parenthood.
"The dismissal of the bogus, politically motivated charges against CMP project lead David Daleiden and investigator Sandra Merritt is a resounding vindication of the First Amendment rights of all citizen journalists, and also a clear warning to any of Planned Parenthood's political cronies who would attack whistleblowers to protect Planned Parenthood from scrutiny," a spokesperson for the center wrote.
The center's attorney, Peter Breen, said that Daleiden was innocent.
"David Daleiden used standard undercover journalism techniques and followed all applicable laws in doing so. This meritless and retaliatory prosecution should never have been brought," Breen wrote.
"Planned Parenthood did wrong here, not David Daleiden."