Cayman Islands: Trademark Talk

Last Updated: 8 December 2017
Article by Peter Colegate and Natalie Lazenby

Most Popular Article in Cayman Islands, December 2017

Cayman calling

They will help FinTech thrive, but the Cayman Islands' new IP laws could also expose trademark owners to bad faith actions

While much of the Cayman Islands' financial services legislation was written before the FinTech revolution began, recent years have seen the jurisdiction take legal and regulatory steps that will allow FinTech innovation to thrive.

In particular, Cayman has the potential to become an important offshore hub for the development and commercial exploitation of IP rights with updated copyright, trademark and patent laws all coming into force during 2016 and 2017. Cayman has a large stake here.

As one of the world's leading offshore financial centres, home to approximately 70% of the world's offshore investment funds and with an absence of any direct taxation on companies or individuals, the Islands are well placed to become an attractive destination for technology entrepreneurs and a global hub for financial technologies.

Other recent developments have seen the establishment of a Special Economic Zone, allowing technology companies to benefit from specific advantages and reduce red tape and financial constraints normally associated with onshore businesses. The zone enables entities to have an offshore presence, provides fast-tracked work permit applications for relocating employees and provides a zero direct taxes incentive.

Finally, in March 2017, the Islands passed the comprehensive Data Protection Law. Seen by many as the final piece in the legislative jigsaw puzzle enabling the FinTech revolution to take hold in Cayman, the new law is drafted around a set of EU-style privacy principles and protects the processing of all personal data in the Cayman Islands.

New trademark regime

With effect from August 2017, the Cayman Islands has a stand-alone trademark regime that is no longer dependent on owners first filing trademark registrations in the UK or at the European Union level and then extending those registrations to the Islands.

The new regime represents a significant development and was part of a package of IP reforms, which came into effect in 2017 designed to enable local and foreign businesses, entrepreneurs and artists to better protect their rights in the Islands and exploit those property rights through increased licensing and trade.

"Well-known or established marks will be vulnerable to trademark 'squatters' registering those marks in the Cayman Islands in bad faith and without the owner's consent."

Despite Cayman being a common law jurisdiction, one unusual quirk of the new regime is that there is no requirement to demonstrate use of a trademark in the Cayman Islands in order to apply for registration of that mark. There is also no procedure for the revocation of a Cayman Islands trademark registration on the grounds of non-use. Cayman's new law therefore sits in an uncomfortable no-man's land between a pure "first-to-file" regime and the usual approach in other common law jurisdictions where a person registering a trademark is required to show use, or a plan to use, the mark in business.

Similarly, the new regime offers no automatic protection for well-known or famous trademarks that were not already registered in the Cayman Islands under the previous extension system. Many countries protect unregistered well-known or famous marks in accordance with their international obligations under the Paris Convention for the Protection of Industrial Property and the Agreement on Trade-Related Aspects of Intellectual Property Rights.

However, the Cayman Islands is not yet a signatory to either agreement. As a result, well- known or established marks will be vulnerable to trademark "squatters" registering those marks in the Cayman Islands in bad faith and without the owner's consent.

Potentially, any company, large or small, is a target for such squatters. In some cases, a company's own manufacturer, distributor, or retailer might decide to register a mark. In other cases, it could be a person who approaches the company at a trade show, asks about plans for expansion to the Cayman Islands, and then registers the mark first after hearing those plans. While such bad faith registrations can be opposed by the true owners of the marks, the opposition process is likely to be expensive and time consuming. Prevention through early registration is the best strategy for dealing with them.

Application process

To apply for a trademark under the new system, an applicant must appoint a local registered agent to submit and manage a trademark application. The application will be subject to the international Nice classification of goods and services and will be examined on both absolute and relative grounds and subject to opposition and infringement proceedings.

Once the examination process is complete, the application will be published in the Cayman Islands Gazette and interested parties will have 60 days from the date of publication to oppose it. To prevent or resolve any opposition, the applicant may disclaim rights to the exclusive use of any particular word, character or element of the trademark, leaving it open to others to use the disclaimed element.

The Certificate of Recording will be issued immediately after the 60-day publication period, provided there are no successful oppositions to the trademark application. It is expected that the processing time for most applications under the new system will be between three to six months. Local businesses or those with regional brands or interests centred in the Americas will therefore be able to protect their brands without having to first register elsewhere or be the subject of a challenge in relation to marks registered there.

Trademark registrations will be valid for 10 years from the date of filing the application. Annual fees are due to be paid on or after the 1 January of each year. Where annual fees remain unpaid on 31 March, a penalty will accrue and the trademark will be held in abeyance. The mark will remain unprotected from infringement until all outstanding fees and prescribed penalties for late payment have been received.

Existing trademarks registered prior to 1 August 2017 will continue to be protected as if they were registered under the new regime until their 10-year renewal date has expired. 

All trademarks that have been extended prior to 1 August 2017 will be considered as transferred marks under the new regime and will therefore be considered as a registered trademark in the Cayman Islands, until the expiration and renewal date of the mark. A new application will then be required. All series marks registered prior to 1 August 2017 will retain protection until the next renewal date, after which such marks will have to be individually registered, as the new law does not recognise series marks.

Registered designs and patents

Other changes that came into effect on 1 August 2017 allow owners of original UK registered designs and registered European Community designs to extend their rights to the Cayman Islands. The extension process affords the owner the equivalent rights, remedies and protection available to them in respect of that design right in the UK or at the European level. Each extension application must be submitted through a registered agent in Cayman and the process takes approximately six to eight weeks. While Cayman's patent laws have been amended to specifically prohibit bad faith infringement claims (generally referred to as "patent trolling"), there is currently no intention to adopt a first registration system for patent applications in the Cayman Islands. Annual fees for registered patents are due to be paid on or before 31 March each year, after which penalties will accrue.

"Changes that came into effect on 1 August 2017 allow owners of original UK registered designs and registered European Community designs to extend their rights to the Cayman Islands."

Copyright

The Copyright (Cayman Islands) Order 2015 and the Copyright (Cayman Islands) (Amendment) Order 2016 extends Part 1 of the UK Copyright, Designs and Patents Act 1988 (as amended) to the Cayman Islands, bringing copyright protection in the Islands in line with the digital age, by broadening the types of works protected and expanding the range of restricted acts. The new laws also provide greater enforcement remedies for copyright holders who can now apply to the courts to seize infringing work and can institute a claim for damages or apply to the Customs Department to have infringing goods seized on their way into Cayman. Copyright protection is an automatic right upon the creation of an original work. The duration of the protection depends upon the type of work and can range from 25 years to 70 years.

Taking a lead in the FinTech space could be a real boost for the Cayman Islands' economic future and the updated package of IP laws has given the jurisdiction a clear advantage in what is an increasingly competitive field of innovation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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