Offshore: Image – Face value

Jason Romer explores how Guernsey is leading the world in protecting celebrities’ images

Keira Knightley, Eva Longoria, Robert DeNiro, Steven Spielberg, Arnold Palmer and Rory McIlroy. What do these individuals have in common? They have all recently received a similar ranking in the Davie Brown Index (DBI), produced by a US marketing agency that seeks to determine a celebrity’s ability to influence brand affinity and consumer ­purchase intent.

Broadly speaking, the higher the DBI ranking, the greater the benefit a business should see if that individual were to endorse their product. Prince William placed 15th and Kate Middleton 29th out of nearly 2,900 celebrities. That puts their potential celebrity influence on a comparable level to the likes of Bill Gates and Barack Obama respectively.

Unaltered image

Although not an exact science, one thing is clear: a celebrity’s endorsement, or the use of their image, has the potential to provide significant value, both for the individual and business concerned.

A recent study by Forbes found that, despite his infamous scandal and injury-plagued season, Tiger Woods is still ­considered the most valuable of sports stars, with the Woods brand being valued at $55m (£34.4m). He is ahead of Roger Federer ($26m), Phil Mickelson ($24m) and David Beckham ($20m). Nike famously paid $200m to Woods for ten years of endorsement.

There is no doubt that Nike’s additional revenue produced by this association has warranted such a considerable fee.

Many jurisdictions will, to some extent, recognise an individual’s right to commercially exploit their image. In the US, a ’right of publicity’ prevents the unauthorised ­commercial use of a person’s name, likeness or other recognisable aspects of their persona. Similar protection may be achieved in the UK through a combination of regimes, including trade marks, data ­protection and passing off.

However, very few jurisdictions have placed such image rights on a statutory ­footing and none allow for the actual registration of these rights. Guernsey is about to change this. Following a considerable review period by the Commercial IP Steering Group and the Drafting Sub-Committee, Guernsey is about to find itself at the ­forefront of image rights protection and registration.

Legal protection

On 30 September 2011, the States of Guernsey (the island’s parliament) approved the drafting of a new law that will protect image rights and see the introduction of registrable image rights in time for ­London’s Olympic Games and the 2012-13 football transfer season.

Celebrities, sports stars and other ­recognisable figures will be able to obtain a registered Guernsey image right protecting certain definable aspects, such as their name, as well as those less easily defined, such as gestures, distinctive expressions, characteristics or attributes.

The legislation will balance the protection of such image rights against other important rights, such as freedom of news reporting and the public interest. Notably, a Guernsey image right may be registered by a person’s estate, meaning such protection is offered to both the living and deceased.

Not only are image rights important due to their commercial value, but the taxation of income arising from such rights is a very hot topic. Tennis player Rafael Nadal has recently confirmed that, for just the second time in six years (the other due to injury), he will not be playing at Queen’s Club next year in preparation for Wimbledon. This is as a direct result of the UK’s approach to tax a proportion of a sports star’s global income for every day spent in the UK.

The UK has previously decided that a player’s income, whether from tournament winnings or endorsement contracts, is ­indistinguishable and should be taxed as a whole. Therefore, if a competition’s potential winnings do not outweigh the proportionate taxation on global income, it may not make financial sense to visit the UK.

Although it is impossible to predict how this area may develop over the coming years, registering a Guernsey image right and structuring income through the licensing of such right could help to show a distinction between a sports person’s income arising from commercial endorsements and that from actually playing their sport.

The introduction of a statutory image rights regime is not the only advantage Guernsey has to offer from an intellectual property (IP) management perspective. It may be extremely beneficial for IP holders, particularly sporting figures and other famous individuals, to consider holding all of their IP in Guernsey.

With innovative corporate structures such as the protected cell company and incorporated cell company, beneficial tax regime and world-class professional service providers, Guernsey is a clear choice for the holding of IP and other assets.

Although the full impact of Guernsey’s image rights legislation is yet to be realised, the island is set to lead the way in developing and gaining experience in a new and exciting IP right, with other jurisdictions no doubt following suit.

Jason Romer is managing partner at ­Collas Crill