Itumeleng Lesofe Competition Commission South Africa Forum shopping: Finding the right balance between the enforcement of competition law and the protection of IPRs Itumeleng Lesofe Competition Commission South Africa

The concept of forum shopping (“FS”) FS: attempt by a party to have its case considered in a forum where it has the greatest prospects of success Even where there is a specialised forum with more experience and competence to consider the matter Choice of forum outcome based – not necessarily based on suitability of the forum Courts and scholars divided on whether FS should be allowed: ConCourt- Chirwa v Transnet: “The concern of forum-shopping is a valid one. It is, as this Court has recently implied, undesirable for litigants to pick and choose where they institute actions in the hope of a better outcome” US 4th Circuit - Goad v Celotex Corp. “there is nothing inherently evil about forum-shopping”

The concept of forum shopping (Cont.) Advantages: Allows lawyers to assist clients locate most favourable forum based on jurisdictional rules May reduce litigants’ costs Efficiency gains: litigants can benefit from remedies that would ordinarily not exist Disadvantages: Can be used as a delaying tactic Chosen forum may lack the necessary expertise Can lead to inefficiencies e.g. over-concentration of cases in one forum

Enforcement of Competition law in IP matters Competition policy and IP policy share same goal: enhance consumer welfare & stimulation of innovation It is generally acceptable to use competition tools in IP matters Overzealous enforcement of competition laws against IP owners can damage the incentives to innovate IP problems should be fixed within the patent system rather than outside SA experiences: there seems to be an increase in the number of complaints brought before CCSA arising from the exercise of IPRs: March 2017 – referred abuse of dominance complaint against firms alleged to be enforcing IPRs illegally in the potato seed market June 2017 – CCSA initiated three complaints against holders of IPRs in the pharmaceutical sector – complaints also abuse of IPRs

Enforcement of Competition law in IP matters (Cont.) Intervention by competition agencies necessary for the following reasons: Easy patentability environment: lack of substantive evaluation process No pre and post grant opposition proceedings Failure to effect compulsory licensing (authorisation to use patented innovation without holder’s permission), as per Patent Act Patent Act has been in existence for over 40 years but no single licence has been issued Consequently, third parties with legitimate grounds for compulsory licensing resort to competition agencies e.g. Hazel Tau case Inefficiencies created by the not so strong IP system lead to abuse of IPRs to the detriment of competition & consumers e.g. Roche alleged to be using ever-greening strategy to delay or prevent entry generic alternative cancer drugs Provisions of the Competition Act as an encouraging factor Section 8(a) – excessive pricing; Section 8(b) – access to an essential facility

What can be done to manage the involvement of competition agencies in IP matters? Is the creation of specialised adjudicative forums for IP matters a solution? Are guidelines on the enforcement of competition law in IP matters effective? Is there sufficient collaboration between IP and competition agencies? Do IP laws in SA require change?