Guernsey is set to beat all the world’s other jurisdictions in overhauling its intellectual property regime to better protect the image rights of high-profile individuals like sports and media stars.

Guernsey is set to beat all the world’s other jurisdictions in overhauling its intellectual property regime to better protect the image rights of high-profile individuals like sports and media stars.

A ground-breaking, yet relatively unknown piece of new legislation is set to put Guernsey firmly on the celebrity radar, making the island a top jurisdiction for sports, media and entertainment stars looking to protect their image rights.

Several jurisdictions are said to be looking to sharpen up their intellectual property regimes to take better account of today’s celebrity-mad, advertising-driven culture. But it is Guernsey, the Channel Island just to the southwest of the UK, which looks set to beat the likes of Singapore in introducing new legislation allowing high-profile clients better protection of their image rights. 

At just 25 square miles in total and with a population of under 65,000, Guernsey has made a habit of punching well above its weight as an international financial centre, priding itself on combining a robust regulatory regime with an approach to new products and legislation which is both considered and innovative. Guernsey’s new image rights legislation is certainly that and is causing a considerable stir in the legal profession, experts based on the island recently told WealthBriefing on a trip to the island.

Diversifying Guernsey’s economy

Guernsey is already doing very well as a diversified IFC; it has a robust private client industry, its bank deposits stood at £101 billion ($157 billion) at the end of March 2012 and at the end of February 695 international insurance entities were registered on the island. But, in the words of Peter Niven, the erstwhile chief executive of Guernsey Finance, the island “is always looking for ways to diversify its economy”. And listening to the lawyers this publication spoke to on the subject, its new image rights legislation is going to mean big business for Guernsey.

By way of introduction to this relatively arcane corner of the legal world, the concept of an image right is in actuality completely new-fangled and is the latest evolution in the copyright laws which initially evolved as a way for authors to protect their writings. In simple terms, when Guernsey formalises the concept of an “image right” it will give individuals the right to protect the use of their name, image or likeness, and of course to protect their right to the financial proceeds arising from any such use.

Sorely-needed legislation

The need for more comprehensive image rights legislation has been brought to the fore by many high-profile cases in recent years. One of these was a dispute between former Formula 1 racing driver Eddie Irvine and TalkSPORT where the latter made use of a digitally-altered photograph of Irvine apparently endorsing its brand. The UK Court of Appeal eventually awarded Irvine £25,000 (up from the original award of £2,000 damages which the judge in the original case called a "reasonable endorsement fee"), but what the case really revealed was the inadequacy of current UK law.

In the Irvine case, the UK courts upheld that there’s no such thing as an image right per se, explained Jason Romer, the managing partner at law firm Collas Crill and one of the masterminds behind the new legislation. Instead, when bringing such claims, high-profile individuals have to rely on a “rag bag” of other rights such as false endorsement, defamation and privacy, he continued.

This was echoed by Elaine Gray, counsel at  Carey Olsen and another expert instrumental in the drafting of the Image Rights (Bailiwick of Guernsey) Ordinance, 2012. “Up until now high-profile individuals like Max Mosley and Naomi Campbell had to rely on a real ‘patchwork quilt’ of legal remedies,” she said (F1 supremo Mosley and supermodel Campbell have of course been embroiled in high-profile intrusion of privacy cases in recent years). The IR Ordinance will “bring a degree of clarity which wasn’t there before,” Gray continued.

As surprising as it may be in this world of celebrity endorsement, the lack of clarity on image rights found in the UK courts is also the case for regimes around the world, Romer added, leaving more innovative jurisdictions to step into the breach. As well as Singapore, Jersey, the British Virgin Islands, Luxembourg and even Jamaica are all IFCs said to be interested in enhancing their IP regimes, but it is Guernsey which is set to steal the march on its international peers in introducing this “world first” law, in all likelihood by the end of this year.

Moves to update Guernsey’s IP regime stretch back to 2002, when the island was granted the right by the UK Privy Council to amend its IP legislation. Fast-forward 10 years, and the island is now poised to enact into its statue books (with no further UK approval required) a new law which will make it possible for high-profile people to register an image right for their name, image or likeness, or indeed any number of other characteristics. In fact, the extent to which certain signifiers such as a unique hairstyle, outfit or even a catchphrase can be protected is a bone of contention – of which more later.

For Romer, Guernsey’s new image rights legislation is an entirely natural evolution of island’s regime. “We [Guernsey] are good at looking after people’s assets, and image rights are just another asset,” he said, adding that such an image rights law is actually sorely needed because “we live in a celebrity-mad world - we live in a world where people need to protect their image rights.” In today’s age celebrities’ images or defining characteristics are “bankable” and need to be protected in the same way as inventors needed patents during the industrial revolution, he explained.

Bones of contention

At this point, the lay observer will probably think “what exactly will be covered by Guernsey’s new law?” This is a simple question which yields a complex answer, since what we are asking is the extent to which an individual can be said to “own” the various manifestations of their image. As touched on previously, it is not just visual representations of the star in question which may be covered, but potentially a whole range of other defining characteristics. As such, stars may try to register and license use of catchphrases like John McEnroe’s “You cannot be serious!” “Image rights will cover any distinctive attribute or indicator of personality and will extend to characteristics and expressions and so yes, in theory, it could get as granular as a celebrity’s distinctive hairstyle,” explains Gray. However, “more realistically it’s likely just to be key images,” she said.

It hardly needs to be said that the extent to which a person can be said to have the rights over an everyday phrase or a type of haircut may well cause interesting legal battles. A lot depends on how granular celebrities are willing to get to protect the various elements of their recognisability. Given the often very large sums they earn from endorsements and the like, one suspects they may want to get very granular indeed.

Here, Romer concedes that Guernsey’s new law may be about to create a lot of work for lawyers internationally, but while the legislation may prove pretty contentious in practice, the principles behind seem relatively commonsense.

In essence, Guernsey is trying to “separate out the individual from their image right, put a statutory framework around that and license it”, Romer explained. Therefore, when an individual feels that some part of their image has been hijacked the basic question will be has the offending party aimed to exploit a defining characteristic of that individual for commercial benefit?

This leads us to the thorny issue of press freedom, and whether litigious celebrities will be able to use the new legislation to more zealously guard their privacy. Here, Romer is absolutely clear: Guernsey’s image rights legislation is in no way intended to impede the freedom of the press; nor will it apply to fair dealing exemptions concerning an individual’s image.

Free speech

“The legislation aims to protect a person from the unfair commercial exploitation of their image…it is not looking at all to impinge on freedom of the press or educational or artistic efforts – that balance is very important,” said Romer. As such, cases concerning parody, satire, news commentary and public interest are addressed in the legislation and “there are wide-ranging carve-outs”, he continued.. “It’s very important to preserve the freedom of the press… particularly if there is a genuine public interest angle,” Gray added.

Gray went on to explain that the courts must look to carefully balance the new image rights legislation with other concerns such as freedom of the press, the human right to private life and public interest, and that therefore there would in all probability be some contentious cases. “We probably will have some fights in court, but we’re comfortable with that, it’s not a new thing,” she said.

Uses of the new legislation

It is no exaggeration to say that Guernsey’s introduction of registrable image rights is going to cause an explosion of business on the island – and not just for legal professionals, although the 130 or so pages of legislation involved will certainly give them some work to wade through. The key to the new image rights legislation’s significance lies in the fact that in making an image “registrable” it then becomes another asset to structure and service. All manner of wealth management professionals could therefore find themselves dealing with image rights in some capacity.

Guernsey is clearly hoping that clients register their image rights on the island and then draw on its extensive financial services and legal expertise for the management of the rights and proceeds deriving from them. Guernsey being a low-tax regime, clients will of course find much to recommend domiciling corporate structures to “house” their image rights on the island. But while there are “clear tax planning opportunities”, here Romer is clear that the “legislation is not driven by tax considerations, but rather the notion of protecting a right”. “It’s not a tax product really; there will be a market for it quite apart from tax planning. It’s a statutory property right which can be traded, securitised and - crucially - passed on,” added Gray.

Rights into perpetuity

Gray is touching on another way in which the new law promises to boost business among Guernsey’s financial and legal professions: succession planning. A key point here is that under Guernsey law image rights will have the potential to exist in perpetuity and so stars will be able to bequeath the licensing for their image rights (or indeed parts of them). Interestingly, the law will allow the posthumous registration of image rights (although this will only go back 100 years). In fact, Romer said he has already received enquiries from the relatives of a recently-deceased celebrity. Here, the question of who owns the rights (the deceased’s estate, spouse or children) “will be a particularly difficult question”, he continued. In such cases “lots of due diligence will have to be performed to ensure that there is a clear chain of title,” added Gray.

Contentious cases like this aside, Guernsey’s existing intellectual capital means it is well-placed to serve all the business which will arise from the IR Ordinance – however complex the structure required. “Once you have legal clarity on the ownership of image rights, you can assign the rights to a company which then trades it…you can enter into contracts, you can get financing,” said Gray, highlighting some of the ways the benefits from image rights could be exploited. As such, the IR Ordinance represents a “perfect partnership with the rest of the financial services industry; it sits well with them and it’s the perfect bolt-on,” she continued.

Who will be “GIR1”?

The IR Ordinance has “clear advantages for ultra high net worth celebrities,” said Gray, “Guernsey will give them an advantage they cannot obtain anywhere else in the world.” There is therefore much anticipation building over who the very first individual to register an image in the island’s registry will be. On this front, one man who will certainly find himself being pumped for information will be John Ogier, registrar at the Intellectual Property Office (part of Guernsey Registry) and a key driver of the initiative from a governmental perspective.

Guernsey expects the first registrations to take place at the end of this year or the beginning of 2013, but since the island is central to the affairs of scores of sports, media and entertainment stars, it’s difficult to speculate who GIR1 will be. One thing is for certain, however, the identity of this individual will likely become public knowledge very quickly as the Guernsey image rights register will be publicly searchable online. This kind of transparency is in fact representative of Guernsey’s whole approach to the legislation – the island is keen to actively engage with HM Revenue & Customs on how it will function in practice, for instance. “We want it to be robust… we want to demonstrate to HMRC that this is a proper product,” said Gray.

The IR Ordinance is clearly a source of some pride among Guernsey’s legal profession, not only because so much work has gone into getting the legislation right. The world’s eyes will all be on Guernsey and so from a reputational perspective “it’s really important to get it right first time round,” explained Romer.

Given how groundbreaking the IR Ordinance is, one would think that Guernsey would be keeping its cards pretty close to its chest when it comes to the intricacies of the legislation – and it has, but while still gathering as many heads around the issue as possible. In the words of Romer, the draft legislation was distributed to a “very focused” group of legal practitioners for their feedback (the consultation period closed in March).

Focused the consultation may have been, but it has also been very thorough and as such Guernsey’s industry is “very optimistic” the legislation will go straight through when it goes before the States of Guernsey (this is hoped for in the autumn some time). The fact that the States unanimously voted for the proposal of the legislation last autumn is “quite unusual” and therefore very promising, said Gray. The fact that Guernsey’s new Commerce and Employment Minister is, in Gray’s words, “very much behind IP” must also bode well - as must the fact that the island is keen to do more business with the media sector in general (the island is also looking to become an international data streaming hub, for example).

Imitation: the sincerest form of flattery

In the years to come other jurisdictions will no doubt amend their own regimes to keep pace with Guernsey’s IR Ordinance but the island’s practitioners are confident of owning the field for some time to come since such complex legislation necessitates a significant lead time. Singapore is widely predicted to be the next jurisdiction to tackle image rights, but it will probably be a couple of years before the Asian powerhouse IFC manages to catch up, experts told WealthBriefing. Guernsey has “first mover advantage just as it did with Protected Cell Companies; image rights offers the same opportunities”, said Gray. Guernsey was of course the first jurisdiction internationally to introduce PCCs back in 1997.

That said, Romer went on to explain that such imitation will actually be viewed very positively by Guernsey since it vindicates the island’s decision that there was a gap in the statue books, as it were. For now, however, those behind the IR Ordinance are proud for Guernsey to stand apart as a unique jurisdiction in the IP stakes. “You don’t often get the chance to do something truly unique and groundbreaking. We’re shouting about it because we’re very proud to have got to this stage – it’s hard to overstate just how unique an offering this is,” said Gray.

It’s not often in the fast-moving world of international wealth management that a jurisdiction can claim to have a truly unique offering, but in this case Guernsey seems to have developed just that. It will be interesting to see how far the island’s financial and legal services industries can press home Guernsey’s advantage.