Shopee fails in court bid to stop former senior exec from joining rival ByteDance

SINGAPORE — E-commerce firm Shopee Singapore has failed in court to prevent its former senior employee from joining rival ByteDance, which operates TikTok and TikTok Shop.

Justice Kwek Mean Luck dismissed the platform's claims to seek interim injunctions to prevent Lim Teck Yong from accepting employment with ByteDance, and to prevent him from soliciting its clients and employees.

In a judgment on Jan 31, the judge said the online shopping platform had failed to prove that its claim that Lim had breached non-competition restriction terms of his employment was not frivolous.

Shopee, which was represented by Clarence Ding Si-Liang and Ariane Kea Tong from JWS Asia Law Corporation, submitted that Lim had acquired information while participating in regular meetings, where the company's strategies and priorities for all markets were shared and discussed.

Justice Kwek said the argument that this "general knowhow" was the confidential information it seeks to protect would exclude Lim from being employed in all the markets where Shopee was operating, even though these are markets he had no specific information about in the 12 months before he left the company.

"In effect, Lim would simply be restrained from working for any competitor of Shopee who had been in Shopee's markets.

"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," said the judge.

Justice Kwek also did not grant Shopee its alternative claim to seek a springboard injunction — which prevents former employees from benefitting from unfair advantage — to restrain Lim from accepting employment with any of Shopee's competitors.

Lim started working for Shopee on Aug 17, 2015.

He signed an agreement that included a non-competition clause, which stated that he would not seek or accept employment with a competitor for 12 months after leaving the company.

Lim also agreed that during that period, he would not solicit business from clients or employees of Shopee's he had dealings with in the year before leaving the company.

He also undertook a confidentiality agreement.

In the eight years at the company, Lim took on various roles in Shopee, including head of regional operations and head of operations for Shopee Brazil.

After resigning in mid-May 2023, Lim served a two-month notice and left the company on Aug 31, 2023.

He started working for ByteDance on Sept 11, 2023, as a leader in TikTok Shop's governance and experience team.

On Oct 6, 2023, Shopee's solicitors sent a letter to Lim where it alleged that he was in "flagrant breach of the non-competition restriction".

It demanded he immediately cease his employment with ByteDance, and to provide undertakings to comply with the non-competition restriction and Lim's obligations under the confidentiality agreement.

In court, Shopee argued that Lim had breached the non-competition restriction by carrying out similar roles and responsibilities for ByteDance in countries it operated.

Shopee added that the non-competition restriction protects its trade connections.

It said that in his various roles for Shopee Brazil, Lim had to manage and cultivate strong professional relationships with key representatives of potential and existing vendors, as well as partners and stakeholders of the platform.

Among other things, Shopee said it gave Lim unrestricted access to the precise commercial terms of the agreements the firm had with its trade connections.

Shopee said the non-competition restriction protects its ability to maintain a stable and trained workforce.

It added that it had an interest in not losing its existing employees due to Lim's solicitation, as well as to its significant investment in training him and building up his expertise.

Lim refuted the allegations through his lawyers. He was represented by Tham Wei Chern and Charis Wang from Fullerton Law Chambers.

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Lim argued that he did not breach the non-competition restriction, as both the scope and geographical range of his work at Shopee Brazil and TikTok Shop were different. 

He said in TikTok Shop, he does not handle payment, fraud, logistics, customer service and warehousing as he did while at Shopee Brazil, adding that he focuses mainly on the markets in the United States and Britain.

Lim also said he was in Brazil in his final 12 months with Shopee, during which his scope of duties and responsibilities was restricted to the Brazil market and did not concern the platform's operations elsewhere.

He denied that he was privy to commercially sensitive information and argued that Shopee had failed to show that the non-competition restriction protects a legitimate proprietary interest.

In his judgment, Justice Kwek said Shopee did not show how there are serious questions to be tried about whether the non-competition restriction was breached.

He said Shopee had not provided any evidence that Lim was undertaking duties outside of Brazil when he was head of operations for Shopee Brazil.

He ordered parties to file written submissions within seven days of the judgment, if they are unable to agree on costs.

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This article was first published in The Straits Times. Permission required for reproduction.