Guernsey is about to agree to enact specific legislation in relation to image rights. “Woo hoo” I hear you all say, “so what?”.
Well, actually, it is quite a big deal. We’ve all heard of image rights, their value, exploitation and use in income and tax planning; but did you know that no other jurisdiction in the world has grappled with the task of defining image rights in legislation? Nobody. Ever.
So what’s an image right and why is this important?
Well, the problem is that there is considerable uncertainty about what an image right is. That said, it is intended the proposed legislation will offer protection from unauthorised commercial exploitation by a third party of the name, voice, signature, photograph, character or likeness of an individual
The exploitation of image rights would include:
- Product endorsement – “[celebrity] drinks Jack Daniels”
- Character merchandising – image on a mug or T-shirt, for example
- Corporate merchandising – [celebrity] randomly appearing in an advert but endorsing the organisation rather than a specific product
- Personal appearances
Current Legislation
The UK law and common law generally is confused as to how it deals with image rights. The EU and civil law jurisdictions include more moral rights but again it is badly codified. In the US there is no federal legislation it is dealt with State by State. Some States have strong legislation, in particular those states with valuable commercial exploitation potential like Tennessee (Elvis) and, naturally, California (Hollywood).
The Proposed Legislation
In addition to defining an image right as detailed above, the legislation will include provisions in relation to freedom of expression and public interest issues; so there will be no restriction on, for example, a newspaper publishing a picture of Jenson Button walking on the seafront (or indeed mentioning people generally).
The legislation will also permit image rights to be assigned, licensed, capitalised, sold, purchased, securitised and given away free with boxes of soap powder (OK, I made the last one up…)
Whilst the legislation cannot be extraterritorial it is hoped that over time it will become recognised by other jurisdictions. China, for example, is very interested in a reciprocal arrangement. No doubt, given time, they will decide to counterfeit it……
The protection of rights internationally (given the lack of extraterritorial application of locally enacted legislation) is a moot point. Clearly under contract law there will be certain protections but by tying contracts in relation to image rights back to a specific Guernsey law any contract law protection should be somewhat strengthened.
Equally, any litigation here would not necessarily be binding internationally, but it would be very persuasive in the absence of any specific reciprocal agreements.
Already the use of Protected or Incorporated Cell Companies has been discussed to provide innovative products for managing image rights. In fact, this is something we at Marlborough have been working on for a while and we have a product. Well two, actually. The fact is we don’t need the legislation to use those vehicles in that way, but the enactment of it will only strengthen our USP’s. Clearly the hope is that, properly exploited, the new legislation will benefit most industry sectors – asset managers, fiduciary, pension, insurance, banking and legal. Insurance? Well yes. Image rights values can be extremely volatile (just ask Tiger Woods) and there are therefore risk management opportunities to protect income streams and residual values.
What’s the downside?
Well there are broadly two. Firstly the lead time to market given the timeline for legislative enactment and, secondly, the reputational risk vis a vis press coverage of high profile celebrities using the jurisdiction for tax planning via image rights. Nothing new there then (on both counts) but perhaps the law officers responsible for drafting this legislation can be persuaded to top pile it? Here’s hoping……