In 2017, Forward entered into a separate agreement with Biogen. Pursuant to that agreement, Forward agreed to terminate the collaboration agreement with Ixchel, stop development of the new drug, and refrain from entering into any new contracts for the development of the new drug. In exchange, Biogen agreed to pay Forward $1.25 billion.
Ixchel subsequently filed suit against Biogen asserting claims for interference with contract, interference with prospective economic advantage, and unfair and unlawful business practices. As a predicate for its unlawful business practices claim, Ixchel argued that Biogen entered into an agreement that violates Section 16600. Specifically, Ixchel argued that the provision in the agreement with Biogen restricting Forward from working on the new drug violates Section 16600.
According to Ixchel, the statute applies to provisions that restrain “anyone” from engaging in lawful business. Although “anyone” is not defined in the statute, Ixchel contends it should indeed mean “any” person and that other statutes regulating competition define “person” to include “a corporation, partnership, or other association.” The district court disagreed. It found that Section 16600 does not apply outside of the employer-employee context and dismissed the case.
Similarly in, Quidel Corp. v. Superior Court, the California Court of Appeal declined to extend this prohibition against noncompetes to circumstances outside of the employment context.