Non-Compete And Confidentiality Clauses In A Beverage Maker’s Contracts With A Bottler And A Consultant Held To Be Unenforceable

Courts will decline to enforce contractual restrictive covenants in agreements that unreasonably restrain trade or lack adequate consideration.

Summary of the Case

Innovation Ventures (IV), developer of an energy drink, entered into contracts with a bottler and with a production consultant. Both contracts contained non-compete and confidentiality clauses. Shortly after the bottler’s and consultant’s business relationships with IV ended, IV sued them, together with their principals, in a state court in Michigan for breach of contract. The trial court granted summary judgment to the defendants. Recently, that decision was affirmed on appeal on the grounds that the agreement with the bottler unreasonably restrained competition, and the contract with the consultant lacked adequate consideration. Innovation Ventures, L.L.C. v. Liquid Mfg., L.L.C., Case No. 315519 (Mich. Court of Appeals, Oct. 23, 2014) (unpublished).

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