JERSEY
Oct 2010: Jersey’s Economic Development Minister, Alan Maclean has lodged the draft Intellectual Property (Unregistered Rights) (Jersey) Law, which it is hoped will establish Jersey as a more attractive center for e-commerce. The law will modernize rights for the digital age and, by bringing Jersey in line with the most recent international standards for copyright, it will be a vital tool in our efforts to promote innovation in the island and attract inward investment because current copyright law in Jersey was devised in a time before the Internet and even before television. The creative industries, particularly software, computer games and electronic publishing, have shown impressive growth rates elsewhere and by updating Jersey’s law we will encourage growth in the island too because Jersey will be a safer place for the creative industries to locate and expand.
GUERNSEY
The Bailiwick of Guernsey, comprising the Island of Guernsey (with the adjacent islets of Herm and Jethou), Alderney and Sark, recently updated its Intellectual Property law with the appointment of The Registrar of Intellectual Property, Mr John Ogier early in 2006 and then the opening of the Intellectual Property Office (www.gov.gg/ipo) on 1st June 2006.
The introduction of the following laws in the Island gives Guernsey one of amongst the most modern intellectual property environments in the world and The Intellectual Property Office offers a comprehensive range of services within this leglslative framework.
Recent changes to the Intellectual Property (“IP”) Laws in Guernsey have modernised IP law in the Bailiwick and provide advantage for Guernsey as a place to manage IP in an offshore tax-neutral environment, whereas formerly offshore jurisdictions have not tended to be used for the management of IP as their legislation has been considered to be not conclusive.
The new IP laws that Guernsey has introduced are primarily based on UK laws but have introduced some of the flexibility from the European regime in that Guernsey is not within the EU and allows Guernsey flexibility to develop new laws to address the rapidly changing fields of IP because the Intellectual Property (Enabling Provisions) Bailiwick of Guernsey Law, 2004 created the power for the Guernsey government to introduce separate ordinances relating to IP.
IP Law includes:
- Intellectual Property (Enabling Provisions) (Bailiwick of Guernsey) Law, 2004
- Intellectual Property (Enabling Provisions) (Bailiwick of Guernsey) Law, 2004 (Commencement) Ordinance, 2005
- Copyright (Bailiwick of Guernsey) Ordinance, 2005
- Database Rights (Bailiwick of Guernsey) Ordinance, 2005
- Intellectual Property (Office of Registrar) (Bailiwick of Guernsey) Ordinance, 2005
- Performers’ Rights (Bailiwick of Guernsey) Ordinance, 2005
- Registered Designs (Bailiwick of Guernsey) Ordinance, 2005
- Trade Marks (Bailiwick of Guernsey) Ordinance, 2006
- Unregistered Design Right (Semiconductor Topographies) (BOG) Ordinance, 2006
- Unregistered Design Rights (Bailiwick of Guernsey) Ordinance, 2005
To raise finance on the back of IP requires security and this is met via The Security Interests (Guernsey) Law 1993 (known as the “Security Law”). This provides that a security interest may be created in any intangible moveable property other than a lease and therefore possibilities of simple debt financing secured on IP or full securitisation structured financing of IP is now possible.
IP Holding Structures – Maximising the Advantages
There are a number of scenarios for IP businesses looking to take advantage of the new IP laws in Guernsey including
a) Creation of an IP company which can operate from Guernsey;
b) use of an existing company based in the UK or elsewhere which established a subsidiary in Guernsey and subsequently transfers the IP to that subsidiary (although early transfer is recommended as transfer of IP at a stage when it has acquired significant value may have negative tax implications;
c) use of an IP company in Guernsey for creation of and holding of IP coupled with use of a Protected Cell Company for the licensing of the IP
The most tax-efficient approach is to generate the IP in Guernsey and use of a trust structure or Protected Cell Company combined with an IP holding company is a structure well known to Guernsey law and provides several advantages as a vehicle for owning and managing IP in Guernsey .
A relatively simple scenario would be a Guernsey IP holding company establishing exclusive licensing structures with a European onshore subsidiary company, particularly one which can
(i) benefit from a favourable withholding tax regime in respect of royalties being transferred out of that country; and
ii) take advantage of a large number of double taxation treaties with countries that have a high market potential.
Use of an IP holding company which then licences the IP to another Guernsey company which is a Protected Cell Company is considered a possibility where the PCC in turn licences the European onshore company and that company then issue sub-licences to develop market potential in relevant jurisdictions. The Guernsey–based trust structure or PCC benefits from licensing revenues and remits part to the IP holding company thus facilitating long-term management and exploitation of IP in a tax-efficient and beneficial environment.