Guernsey claims a first with its news image rights legislation. David Evans and Edward Stone of Collas Crill look at the new regime and how it may benefit private clients.

Over the last 20 years or so, the cult of the celebrity has risen inextricably and with it the ability for celebrities and personalities to generate wealth through their images. The traditional role of the celebrity was one that was controlled by the corporations to which they were contracted - whether movie studios, record companies, sports clubs etc. There has been a huge shift in how the individual has been able to take control of their affairs and how their image rights and other intellectual property generally have become ever more valuable. As a response to this, Guernsey launched the world's first registrable image right on 3 December 2012.

The rise of the individual as a brand

Back in the distant past of the late 20th Century there were very few individuals who could rightfully claim to be a brand in their own right. Due to the way in which we now all consume media and entertainment, the ability for stars to leverage their brands and communicate with large numbers of their fans has changed this dynamic.

Seemingly overnight Lady Gaga can have millions of Twitter followers and stars can interact with their audience in a way that was not possible even 10 years ago. This has given the individual much more power, which has in turn shifted power away from the studios and record companies. This change in the way we consume media and entertainment has also given rise to new problems of how we protect stars and their brands. Traditionally, the protection of a brand name was the preserve of large corporations who would protect their name and product ranges through registered trade mark rights. This is still the case today and for these clients, trademarks function perfectly well. For celebrity clients, however, such trademark rights can fall far short of the protection required to operate in today's marketplace where image exploitation and product endorsement can be extremely lucrative.

Protection for the individual as a brand

In general, any individual in the public eye or able to be the 'face' of a brand will wish to protect the likeness of their image or at the very least, their name. For sports personalities, signature celebration poses, such as Usain Bolt's lightning bolt pose, are widely recognised and used worldwide.

Protecting these has proved difficult to do in the UK and elsewhere where there is a definite reality that traditional trademark protection has not kept up with this rise of individual celebrity. The UK courts have also found difficulties when dealing with false endorsement claims, where a celebrity's image is used without their permission to create a misleading association with a product. In the most important case of false endorsement in the UK of recent times, Eddie Irvine, the well-known Formula One racing driver sued Talksport Radio for passing off and in particular, for using his image in an advert advertising the radio station without obtaining his consent. Having received the paltry sum of £2,000 damages for passing off at first instance, the case was appealed and Irvine was awarded £25,000 damages. The problem for Irvine and other famous personalities is that because such an action is based on the common law right of passing off, this involves the need for the claimant to prove a significant reputation or goodwill. In addition, the claimant must prove that a not insignificant share of the market will believe that the image has been used on the goods as an endorsement.

This again puts the onus squarely on the claimant to prove their reputation and provides no mechanism for them to assert any sort of registrable right.

Guernsey image rights solution

The Guernsey Image Rights legislation seeks to redress the balance in favour of the personality by giving them the ability to protect not only their image rights, but also other rights associated with them such as voice, mannerism, gesture and any other distinctive characteristic. In addition, it also allows for a corporation to be a personality in itself and for fictional characters to be registered. This extends the range of what is able to be protected far beyond the scope of traditional IP and also has no direct link to the goods or services provided by the personality, as trademarks do. One other unique feature of the law enables humans who have died within the last 100 years to be registered as a personality. This gives the estates of deceased personalities the ability to continue to effectively license and manage these valuable rights in a way previously impossible to do.

Succession and tax planning opportunities

One of the main attractions of this legislation, from a succession planning viewpoint will be to provide the ability for personalities and celebrities to incorporate image rights formally into their succession planning for the first time.

As these rights are effectively able to be registered in perpetuity (subject to the appropriate renewal fees), this means that they can be treated as an asset for estate planning purposes and dealt with accordingly. These image rights would then sit alongside any other intellectual property assets and would form part of the portfolio of rights owned by the personality or their company.

For tax planning, how celebrities, sports professionals and teams and other media personalities can best exploit Guernsey's image rights legislation to structure their image rights will be largely dependent on where such celebrities or other personalities are resident for tax purposes.

It is anticipated that the most common structure for holding and exploiting image rights will be for the image rights to be held through corporate entities, whether owned directly by the celebrity or personality or indirectly through a trust established for their benefit. For international superstar personalities whose images can be exploited globally, licenses to exploit the stars' images in different countries or global regions can be given to separate subsidiary companies and the use of offshore companies may allow for tax mitigation.

Protected cell companies could also be used, where each cell could own the image rights of a member of a sports team or the right to exploit one personality's rights in a particular country or global region. The careful planned use of companies may also allow for income deferral so that the income earned from licensing the image rights is received at the most appropriate time and need not be distributed until after the personality's public profile has waned when other income streams may have dried up.

Many banks and other lending institutions may also prefer to lend against the security of image rights held through a corporate entity.

Originally published in Private Client Practitioner, January 2013

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