The trial court granted summary adjudication against Quidel Corporation invalidating an exclusivity provision in an ongoing relationship between two businesses engaged in a joint development, manufacture, and sales venture. The trial court’s order propagated a legal standard of per se invalidity that would have proven devastating to California businesses.
Horvitz & Levy filed a writ petition on behalf of Quidel. The Court of Appeal filed a published opinion granting the writ petition and recognized that the case presented a “significant legal question of broad public interest.” The Court of Appeal reversed the grant of summary adjudication. It held that the exclusivity provision was not per se invalid under Business & Professions Code section 16600. Instead, exclusivity provisions among businesses are valid so long as they do not negatively affect the public interest, are designed to protect the parties in their dealings, and do not attempt to establish a monopoly.
The California Supreme Court granted review and ordered briefing deferred pending its decision in Ixchel Pharma v. Biogen, Inc. (2020) 9 Cal.5th 1130. After the court issued its opinion in Ixchel, it transferred the matter to the Court of Appeal to vacate its opinion and reconsider the case in light of the Ixchel opinion. The Court of Appeal issued a new opinion in which it again held that the exclusivity provision was not per se invalid and reversed the grant of summary adjudication.