Forum Shopping: Finding the Right Balance between the Enforcement of Competition Law and the Protection of Intellectual Property Rights

• Jurisdiction: South Africa
• Published date: 20 August 2019
• Author: Itumeleng Lesofe
• Date: 20 August 2019
• Pages: 450-477
• Citation: (2017) 29 SA Merc LJ 450

FORUM SHOPPING: FINDING THE RIGHT

BALANCE BETWEEN THE ENFORCEMENT

OF COMPETITION LAW AND THE

PROTECTION OF INTELLECTUAL

PROPERTY RIGHTS

ITUMELENG LESOFE*

Principal Analyst, Competition Commission SA

Abstract

Much has been said and written about forum shopping of late. Some

courts and scholars have even recognised and, to some extent, endorsed

the practice. This phenomenon also appears to have surfaced in disputes

relating to the protection of intellectual property rights (IPRs). In this

regard, there appears to be a growing trend among litigants with

disputes relating to patents, to use forums and institutions that are not

necessarily designed to resolve such disputes. This is notable in a recent

decision by the Competition Commission of South Africa to prosecute

two f‌irms accused of abusing their dominant positions by enforcing

IPRs beyond their period of protection. While there may be benef‌its

associated with the practice, pervasive forum shopping can also lead to

the concentration of cases in one or very few forums which, in the eyes of

litigants, are likely to make favourable determinations. Thus, forum

shopping may encourage litigants to make an outcome-determinative

choice when selecting an appropriate forum. This in turn can create

ineff‌iciencies. The aim of this article is to determine how best to

approach the quandary of forum shopping in cases relating to the

protection of IPRs. The article focuses on the interplay between intellec-

tual property law and competition law, and determines whether the

intervention by competition agencies in intellectual property matters is

necessary.

I INTRODUCTION

In March 2004, the Organisation for Economic Co-operation and

Development (OECD) invited competition delegates to contribute

*LLB (UL) LLM (UP). This article is based on research conducted by the author for his LLD

studies at the University of Pretoria. The views expressed and any errors are those of the

author. The author is indebted to Neo Molefe and Nompucuko Nontombana for their

comments, and Annalee van Reenen for her research assistance.

450

(2017) 29 SA Merc LJ 450

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papers in preparation for its Roundtable on Competition Policy and

Intellectual Property (IP) Policy. Delegates were called upon to make

submissions on specif‌ic themes and, in particular, the OECD posed the

following questions to them, among others:

• What is the proper role for competition agencies with respect to

IP?

• Should competition agencies be allowed to challenge the validity

of questionable patents?

• How can competition agencies, whose primary expertise is not in

IP, effectively determine the scope and assess the validity of

complex patents?

• Should competition agencies simply establish good communica-

tion with IP agencies and play only an indirect role in the

formulation and implementation of patent policy?

1

Despite a divergence of views among delegates, there are several key

points that emerged from their submissions in response to the OECD’s

call. The OECD summarised one of these key points as follows:

‘Overzealous enforcement of competition laws against IP owners can

damage the incentives to innovate that IP systems are designed to foster.

On the other hand, when IP is excessively easy to obtain, it may lead to

market power, to the detriment of competition and consumers. Therefore,

in an ‘‘easy patentability’’ environment, for example, competition agencies

and courts tend to compensate by using competition laws to limit the

negative effects of over-patenting. Because competition law is a relatively

blunt instrument for that purpose, however, it would be preferable to f‌ix

the problems from within the patent system rather than from outside it.’

2

There are no easy answers to these questions posed by the OECD. As

such, it should not be surprising that the debate on the correct balance

between the enforcement of competition law and the protection of

intellectual property rights (IPRs), persists. Some have described inter-

ventions by competition agencies in IP matters as overstretching,

3

while

litigants who rely on competition law to resolve IP-related matters have,

in some instances, been accused of engaging in the practice of forum

shopping.

1

OECD, ‘Policy roundtables on intellectual property rights’ (2004) 24 DAF/COMP’,

available at https://www.oecd.org/daf/competition/34306055.pdf, accessed on 23 June 2017.

2

OECD, ‘Policy roundtables on intellectual property rights’ (2004) 24 DAF/COMP’,

available at https://www.oecd.org/daf/competition/34306055.pdf, accessed on 23 June 2017.

3

Hlatshwayo, ‘The challenges of IP protection and competition enforcement: An analysis

of the Microsoft decisions (US and EU) and their implications for South African IP and

competition law’ (2008) 2 Journal of Information, Law and Technology 1at4.

FORUM SHOPPING: FINDING THE RIGHT BALANCE 451

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