California Supreme Court Wrestles with Section 16600

In his byline article for the Daily Journal titled “Section 16600 and Ixchel: Benefit or Burden?,” partner Patrick Hammon reviews the California Supreme Court decision in Ixchel Pharma LLC v. Biogen Inc., which attempts to resolve concerns on competition and contractual arrangements covered by Section 16600 of the California Business and Professions Code.

In its Aug. 3 opinion, the Court ruled, first, while Section 16600 does apply to restraints on trade in business-to-business agreements, they are only invalid if they fail the “rule of reason” test; and second, a plaintiff must plead an “independently wrongful act” to allege a claim for intentional interference with an at-will contract.

Patrick examines the “rule of reason” test and discusses the broad impacts of this decision on California businesses. He says, “By raising the threshold for adequately stating an intentional interference with an at-will contract claim, the Ixchel decision will promote enhanced and aggressive competition among California businesses.”

To read the full article, visit the Daily Journal. (subscription required)