Liability Knows No Borders: BioSkryb And The Extraterritorial Reach Of California’s Section 16600.5.

The North Carolina Business Court recently issued a decision that serves as a sharp reminder that California’s hostility to restrictive covenants can reach well beyond its borders—and attempting to enforce a void restriction may itself create liability.

BioSkryb, a North Carolina–based biotechnology company, removed one of its co-founders and former executives, Jason West, in 2024. Shortly thereafter, and following his resignation from BioSkryb’s board of directors, Mr. West formed a new venture, AClarity Genomics, Inc.

Suspecting that Mr. West had misappropriated trade secrets and other confidential information to launch a competing business, BioSkryb filed suit. Among other claims, it alleged breach of Mr. West’s employment agreements and sought injunctive relief. Those agreements included one-year employee and customer non-solicitation covenants, as well as California choice-of-law provisions.

Mr. West countersued, invoking a relatively new and still underdeveloped provision of the California Business and Professions Code, Section 16600.5. (We previously wrote about Section 16600.5, here). The statute provides that an employer that attempts to enforce a contract containing an unlawful restraint on trade commits a civil violation and may be liable for damages and attorneys’ fees. BioSkryb did not dispute that, through its lawsuit, it had attempted to enforce the challenged restrictive covenants.

Following discovery, BioSkryb voluntarily dismissed its affirmative claims, leaving only Mr. West’s counterclaim under Section 16600.5. Mr. West then moved for summary judgment on liability (but not damages).

The dispositive issue became whether California law governed the employment agreements. Both parties conceded that, if California law applied, the restrictive covenants at issue were void. Mr. West sought to enforce the agreements’ express choice-of-law provision. BioSkryb, in contrast, argued that the provision should be disregarded because the agreements lacked a sufficient connection to California.

On June 8, 2026, the court sided with Mr. West in an order granting summary judgment. It identified several undisputed facts establishing a reasonable basis for the parties’ selection of California law:

• BioSkryb had at one point considered relocating its headquarters from North Carolina to California;
• Although the company ultimately remained in North Carolina, one of its co-founders relocated to California;
• BioSkryb held in-person board meetings in California, retained California-based corporate counsel, and required Mr. West to travel to California frequently—at least twenty-five times in connection with his duties.

The court further held that applying California law would not contravene a fundamental policy of North Carolina—a finding that, if otherwise established, could override a valid choice-of-law provision. To the contrary, the court noted that North Carolina, like California, disfavors restrictive employment covenants.

The court also addressed the extraterritorial reach of Section 16600.5(d). BioSkryb argued that applying the statute in a North Carolina forum would violate the presumption against extraterritorial application of state law. The court rejected that contention, concluding—consistent with a recent federal decision from Arizona—that the statutory language unambiguously reflects the California legislature’s intent for Section 16600.5 to apply beyond California’s borders.

Takeaway:

BioSkryb underscores the growing risk that California’s antipathy to non-competes, particularly Section 16600.5, poses to employers nationwide. Where a contract contains a California choice-of-law provision, even limited contacts with the state may be sufficient to trigger application of California law. And critically, the act of attempting to enforce restrictive covenants in other jurisdictions may now expose employers to affirmative liability.

BioSkryb Genomics, Inc. v. AClarity Genomics Inc.