## Facts

- Ixchel Pharma, LLC and Forward Pharma A/S entered a collaboration agreement to develop a dimethyl fumarate (DMF) drug for Friedreich’s ataxia.
- Ixchel agreed to assign certain patent rights to Forward; Forward agreed to investigate feasibility and, if feasible, conduct and fund clinical trials with Ixchel’s assistance.
- The collaboration agreement was terminable “at any time” on 60 days’ notice.
- Forward and Biogen, Inc. were involved in a patent dispute concerning DMF for multiple sclerosis and resolved it through a settlement and license agreement.
- The settlement required Forward to terminate existing and refrain from entering new agreements related to development of DMF for multiple sclerosis or other neurological indications, expressly including the Ixchel collaboration.
- Forward exercised its at-will termination right and ended the collaboration after providing notice, although development had been proceeding as planned.
- Ixchel sued Biogen alleging tortious interference with the at-will collaboration contract, tortious interference with prospective economic advantage, and an unlawful restraint of trade under California Business and Professions Code § 16600 based on the settlement provision.

## Issues

1. For tortious interference with a contract terminable at will, must the plaintiff plead and prove that the defendant’s conduct was independently wrongful beyond the interference itself?
2. Does California Business and Professions Code § 16600 apply to business-to-business restraints, and if so, are such restraints judged under a per se rule or the rule of reason?

## Decision

- The court held that tortious interference with an at-will contract requires pleading and proof of an independently wrongful act.
- The court held that § 16600 applies to contractual restraints on business operations and commercial dealings between businesses.
- The court held that business-to-business restraints under § 16600 are evaluated under the rule of reason rather than being automatically void.
- The court answered these questions to guide further proceedings applying the standards to Ixchel’s pleadings.

## Legal Principles

- An at-will contract provides no legal assurance of continued economic relations; interference with such a relationship is treated similarly to interference with prospective economic advantage.
- For interference with an at-will contract, the defendant’s conduct must be “independently wrongful,” meaning unlawful under some determinable constitutional, statutory, regulatory, common-law, or comparable legal standard.
- Business and Professions Code § 16600 is not confined to employee noncompetes; it can reach agreements that restrict one business’s dealings or operations with respect to lawful trade.
- In the business-to-business context, § 16600 restraints are assessed under a rule-of-reason framework that examines competitive effects, justifications, and whether the restraint is broader than reasonably necessary, focusing on harm to competition rather than harm to a particular competitor.

## Conclusion

The California Supreme Court clarified that interference with an at-will contract requires independent wrongfulness and that § 16600 can apply to inter-business restraints, which must be evaluated under rule-of-reason analysis rather than per se invalidity.


Ixchel Pharma, LLC v. Biogen, Inc., 9 Cal. 5th 1130, 470 P.3d 571 (Cal. 2020)