Two hundred years ago, wealth was measured in land. A hundred years later, and following the advent of the industrial revolution, agricultural land became less important and was replaced by industrial wealth – factories and the machines inside them.
Today this evolution continues, and IP is an extension of this evolution. Indeed, it is often claimed that IP is the new currency of the knowledge economy.
IP rights are national in nature and therefore any jurisdiction that wishes to generate economic advantage from IP needs to ensure that its laws are both fit for purpose and are recognised under the relevant international treaties.
Lawyers advising IP-rich businesses on where best to hold their rights need to ensure that their advice is not just tax-driven, but also takes on board the relevant jurisdiction’s domestic IP laws and the international angle.
The Isle of Man is a jurisdiction that is working hard to ensure it can create an offering for IP rights businesses that makes sense from both legal and tax perspectives.
In the international IP landscape, this can create interesting challenges. The Isle of Man – or indeed any offshore jurisdiction – can enact whatever domestic legislation it wishes in the IP arena, but unless it works from an international perspective, this will not really be attractive to non-domestic businesses.
Unlike other offshore financial centres such as Jersey and Guernsey, the Isle of Man has decided not to have its own IP registers.
There is obviously an argument that having a domestic registry does have the potential to create an increased understanding of IP in a jurisdiction. On the other hand, it does lead to extra administration, irrespective of how straightforward and procedural this is, for owners of international IP rights.
The Isle of Man’s parliament could decide to enact legislation in this area to provide for its own domestic IP registry. However, perhaps because of its stronger links to English common law than some other offshore jurisdictions’, the Isle of Man has decided to have certain UK legislative provisions in this area extended to it, both in the primary legislation in the UK and by way of orders in council.
Accordingly, the UK Patents Act 1977 and the UK Trade Marks Act 1994 extend to the Isle of Man. The island has its own Copyright Act, dating from 1991, but this is based very much on the UK’s Copyright, Designs and Patents Act 1988. Via the UK, the Isle of Man is a member of the Paris Convention, the Berne Convention and the Rome Convention.
For jurisdictions that have their own domestic patent registers, a separate process is required to have UK and European patents and patent applications extend to their respective jurisdictions – although such a formality is not required in the Isle of Man.
The Patent Co-operation Treaty (PCT) was extended to the Isle of Man on 29 October 1983. As all IP lawyers know, the PCT is administered by the World Intellectual Property Organisation (WIPO) and makes it possible to seek patent protection for an invention simultaneously in each of a large number of countries by filing an ‘international’ patent application. Such an application may be filed by anyone who is a national or resident of a contracting state.
A single international patent application under the PCT has legal effect in all the countries bound by the treaty. PCT applicants have more time than under the traditional patent system to decide in which of the PCT countries to continue pursuing patent protection. Thus the PCT system consolidates and streamlines patenting procedures.
The European Patent Convention (EPC) also extends to the Isle of Man. Again, as IP lawyers know, this simplifies access to Europe-wide patent protection. The EPC covers convention counties and is not a treaty of the EU. Patents granted under the EPC are national in character and therefore a European patent extends to the Isle of Man if such a patent is effective in the UK.
The Isle of Man is not a member of the EU and this obviously has implications in relation to the Community Trade Mark System (CTM). As such, the jurisdiction had to effect orders in council to extend the provisions of the CTM to the island.
As with patents, UK legislation in relation to trademarks has been extended to the Isle of Man. Accordingly, no formalities are required to extend UK trademarks and trademark applications to the Isle of Man.
The Isle of Man is a member of the Madrid Protocol under the auspices of the UK (the protocol was ratified on behalf of the UK and the Isle of Man). Neither the UK nor the Isle of Man is a member of the Madrid Agreement.
The Madrid Protocol offers the trademark owner the chance to protect a trademark in the territories of 81 countries by virtue of its registration with the WIPO on the basis of a single application.
The Madrid system offers the trademark owner the possibility of having their trademark protected in several countries by simply filing one application directly with their own national or regional trademark office.
An international mark registered is equivalent to an application or a registration of the same mark effected directly in each of the countries designated by the applicants.
The Madrid system also simplifies greatly the subsequent management of the mark, as it is possible to record subsequent changes or to renew the registration through a single procedural step.
The obvious problem the Isle of Man faces is that it is constantly required to keep up to date with changes in UK, EU and international law in relation to IP rights in order to ensure that its legislation is appropriate in this area.
This can create challenges. For example, although the UK-registered design right extends to the Isle of Man, the jurisdiction not yet recognise community designs. The island is in the process of dealing with the lacuna regarding community design rights by putting in place appropriate orders in council. UK-based lawyers will be conscious of the offshore element when giving clients tax advice. Indeed, the tax situation is usually the driver for a company’s location or relocation to an offshore financial centre.
However, there are pitfalls for the unwary IP lawyer if they fail to consider the international and IP treaty element if their client is considering holding or transferring IP rights offshore.
Nick Verardi is joint head of commercial and Claire Milne is a senior associate at Dickinson Cruickshank