SingComp-AI (“SCAI”) is a Singapore-based startup which develops compliance technology driven by artificial intelligence (“AI”) for financial institutions in Singapore. Compliance technology helps financial institutions in their adherence to applicable laws and regulations, as well as identifying and managing compliance-related risks. In the first year of its operations, SCAI assembled a competent team of professionals to help build its AI infrastructure and to support its growth. Marisa, an AI professional, was hired to head the product development team, and she is widely recognized as one of the key contributors to SCAI’s early success. In SCAI’s second year of operations, Marisa tendered her resignation. It was revealed that Marisa will be joining a rival company called “Eye-Tech” (“ET”), which upset the management of SCAI greatly. ET operates in the same business niche as SCAI, and is also looking to develop similar AI-driven compliance technology for financial institutions. Given Marisa’s intimate knowledge of SCAI’s operations and technologies, management is concerned that Marisa may use proprietary information from SCAI in her new role at ET. SCAI’s employment contract for all of its employees, including Marisa, contains this clause: “Restrictive Covenant (‘RC’) For a period of one (1) year following the termination of your employment (for any reason whatsoever) with SCAI, you shall not work for, or engage in any business with, any entity, whether in Singapore or elsewhere, which operates in the field of developing or providing AI-driven compliance technology for financial institutions.” Discuss whether SCAI is able to enforce the RC clause against Marisa to restrain her from working at ET, based on the legal rules at common law relating to restraint of trade. (In your answer, you should also discuss the applicability of the doctrine of severance.)
SingComp-
In the first year of its operations, SCAI assembled a competent team of professionals to help build its AI infrastructure and to support its growth. Marisa, an AI professional, was hired to head the product development team, and she is widely recognized as one of the key contributors to SCAI’s early success.
In SCAI’s second year of operations, Marisa tendered her resignation. It was revealed that Marisa will be joining a rival company called “Eye-Tech” (“ET”), which upset the management of SCAI greatly. ET operates in the same business niche as SCAI, and is also looking to develop similar AI-driven compliance technology for financial institutions. Given Marisa’s intimate knowledge of SCAI’s operations and technologies, management is concerned that Marisa may use proprietary information from SCAI in her new role at ET.
SCAI’s employment contract for all of its employees, including Marisa, contains this clause:
“Restrictive Covenant (‘RC’) For a period of one (1) year following the termination of your employment (for any reason whatsoever) with SCAI, you shall not work for, or engage in any business with, any entity, whether in Singapore or elsewhere, which operates in the field of developing or providing AI-driven compliance technology for financial institutions.”
Discuss whether SCAI is able to enforce the RC clause against Marisa to restrain her from working at ET, based on the legal rules at common law relating to restraint of trade. (In your answer, you should also discuss the applicability of the doctrine of severance.)
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