Shopee sues ex-senior employee to stop him from working for ‘competitor’ ByteDance, citing non-compete clause

Shopee sues ex-senior employee to stop him from working for 'competitor' ByteDance, citing non-compete clause

SINGAPORE: A senior employee who worked at Shopee for eight years, heading regional operations, left and joined ByteDance, which owns TikTok and its related e-commerce platform.

When Shopee Singapore learnt of Mr Lim Teck Yong’s new job, it sent a letter to Mr Lim through its lawyers, alleging that he had flagrantly breached a non-competition clause.

Under the agreements Mr Lim had signed with Shopee when he was working with the e-commerce giant, he was not to pursue employment with any competitor within 12 months of leaving Shopee.

When Mr Lim refused Shopee’s demands to cease his new employment with ByteDance and provide written undertakings that he would comply with the non-competition restriction and related obligations, Shopee took him to court.

Among its orders sought from the court were: Interim injunctions to restrain Mr Lim from accepting employment with Bytedance, interim injunctions to restrain Mr Lim from soliciting Shopee’s clients and employees, or a springboard injunction to restrain Mr Lim from accepting employment with any of Shopee’s competitors.

In a judgment released on Wednesday (Jan 31), Justice Kwek Mean Luck dismissed Shopee’s requests for injunctions and said Shopee has raised no “serious question” to be tried.

Even if it had, Justice Kwek said he would not have granted the requested injunctions. 

EMPLOYMENT WITH SHOPEE

Mr Lim joined Shopee Singapore in August 2015 as its head of regional operations, HQ. Shopee operates in markets including Southeast Asia, Taiwan and Brazil.

When he first joined, he signed a Restrictive Covenants Agreement (RCA) with a non-solicitation and non-competition clause, as well as an Employee Confidentiality Agreement (ECA).

Mr Lim later held other roles including: Head of regional people team, Shopee; senior director of regional operations, HQ; and executive director of regional operations, HQ.

His last role before he left Shopee was as executive director, head of operations for Shopee Brazil.

He was in this role from January 2021 until mid-May 2023, when he resigned. He served his notice period of two months and went on unpaid leave of absence from July 2023 to August 2023, with his last day at Shopee on Aug 31, 2023. 

Mr Lim joined ByteDance on Sep 11, 2023 as “leader for TikTok shop governance and experience, middle platform”. ByteDance owns social media platform TikTok, which launched an e-commerce platform under the label TikTok Shop.

The scope of Mr Lim’s responsibilities with Shopee and the extent of the similarities between his roles with Shopee and ByteDance are disputed by Mr Lim and Shopee.

ARGUMENTS BY BOTH SIDES

Shopee’s lawyers from JWS Asia Law Corporation, Mr Clarence Ding Si-Liang, Ms Ariane Kea Tong and Ms Sarah Teo, argued that Mr Lim’s new role was “substantially similar” to the roles he had in Shopee.

These include managing user experience, designing of policies for seller and listing management and managing after-sale services such as returns and refunds.

Mr Lim argued that his new role was in a team that had a primarily supporting role, including assisting with data analysis and root cause analysis to enhance operational metrics.

On top of this, TikTok Shop operates in the United States, United Kingdom and parts of Southeast Asia, while his last role with Shopee was in Brazil, where TikTok Shop does not currently operate.

TikTok Shop therefore cannot be construed as a competitor of Shopee in Brazil, Mr Lim argued.

According to his reading of the RCA Mr Lim signed, the judge said the period for consideration was the 12 months before Mr Lim left Shopee.

During this period, Mr Lim held only the position of executive director, head of operations for Shopee Brazil.

‌Shopee initially said Mr Lim also had concurrent duties or managerial responsibilities as executive director of regional operations, but later accepted there was nothing in its own affidavits testifying to this.

Counsel for Shopee said e-commerce is a highly specialised industry, and that Mr Lim had a “very senior” position in Shopee, receiving “extensive training” during his long tenure.

While Shopee was unable to point to any specific confidential information Mr Lim had access to, its lawyers said Shopee’s concern “was more with the general know-how” that Mr Lim was exposed to, rather than any specific set of information.

Shopee said Mr Lim acquired certain confidential information by taking part in “regularly held regional operations meetings” where Shopee’s strategies and priorities for all markets would be shared and discussed.

However, Justice Kwek said this argument would mean that Mr Lim would have to be excluded from being employed in all the markets where Shopee was operating, even though Mr Lim had not worked there, had no responsibilities for and had no specific information about in the 12 months before his employment with Shopee ended.

“In effect, (Mr) Lim would simply be restrained from working for any competitor of Shopee who had been in Shopee’s markets,” said Justice Kwek. 

“I have serious doubts that it could be said that there is a serious question if this would be regarded as reasonable as between the parties or reasonable in the interest of the public.”

On non-solicitation of Shopee’s customers, the e-commerce giant did not have any specific evidence that Mr Lim had breached those restrictions.

Instead, Shopee argued that there was a risk of a breach, pointing to how Mr Lim refused to provide undertakings that he would not breach them.

Justice Kwek disagreed. He said Mr Lim had already provided these undertakings when he first signed the RCA when taking on his job with Shopee in 2015.

Shopee’s own lawyers acknowledged that the new undertakings Shopee requested in 2022 did not add anything legally, as Mr Lim had already committed to those obligations when he signed the RCA and ECA.

Mr Lim was defended by lawyers Mr Tham Wei Chern and Ms Charis Wang from Fullerton Law Chambers.

He said he did not want to provide the further undertakings for the non-compete restriction for reasons including that the “trade restraint clause is unreasonable in scope and duration and amounts to an unlawful restraint of trade”.

Justice Kwek said it could hardly be said in the circumstances that Mr Lim was unreasonable in refusing to provide the further undertakings.

Mr Lim has also stated in a sworn statement before the court that he has not breached and will not breach his confidentiality obligations to Shopee.

JUDGE’S DECISION

Explaining why he was dismissing Shopee’s case, Justice Kwek said there were serious doubts about whether the non-competition restriction was valid “because of the lack of a legitimate proprietary interest” and “the reasonableness of the geographical restraint” Shopee was seeking.

Mr Lim did not have any duties or any specific information relating to the markets in those areas, the judge said.

Shopee has also failed to show how there are serious questions to be tried about whether the restriction is valid or breached.

For the non-solicitation restrictions, Shopee had not shown that Mr Lim was about to breach those restrictions.

For the springboard injunction it sought, it similarly did not show there was risk of misuse of the information.

Justice Kwek found that “Shopee has not shown that it has any prospects of success which, in substance and reality, exist”.

“Its prospects are so small that they lack substance and reality,” he said.

The judge added that even if Shopee had raised serious questions that had to be tried, he would not have granted the interim injunction it sought, barring Mr Lim from working at ByteDance.

This was on the “balance of convenience”, that a court should take whichever course appears to carry the lower risk of injustice if that course should ultimately turn out to be wrong.

“In this case, as set out above, Shopee’s case is very weak. The status quo is that (Mr) Lim has already started work for ByteDance. This would be disturbed if the interim injunction is granted,” said Justice Kwek.

“Given the serious doubts over the possibility of Shopee’s eventual success, in my judgment, it would be in the interests of justice not to disturb that status quo.”

He asked both sides to file submissions on costs.