Historically, the offshore world has been known largely for its financial services industries. In recent years, many offshore financial centres have been looking to diversify their economic portfolios. In this regard, Guernsey’s decision to diversify its portfolio by establishing a cutting-edge intellectual property regime is proving to be well-founded.
In 2002, Guernsey’s government approved a pivotal policy document. This proposed the creation of an innovative suite of intellectual property (“IP”) legislation. The vision was that Guernsey should be recognised as a centre of excellence for the development and management of intellectual property rights (“IPRs”).
In this Article, we outline the IP regime in Guernsey generally. Other Red Articles deal specifically with the protection of different types of IPRs.
The Bailiwick of Guernsey comprises the islands of Guernsey (with the adjacent islets of Herm and Jethou), Alderney and Sark, situated in the English Channel and close to the coast of France. Guernsey is a self- governing Crown Dependency with its own legislature, known as the States of Deliberation. Alderney and Sark have their own legislative assemblies. The respective Islands’ parliaments have wide legislative competences, although some types of primary legislation require to be sanctioned by Her Majesty in Council before becoming law.
The Genesis of Guernsey’s IP Regime
The 2002 policy document referred to above recommended that Guernsey’s legislature adopt a series of legislative measures to transform the Island into a modern cutting- edge IP jurisdiction. Guernsey has passed the basic cornerstone law which have enabled it to become TRIPS compliant. The cornerstone IP laws have drawn on a comprehensive review of other IP jurisdictions so that, for example, Guernsey’s legislation for database rights have been drafted to address perceived dilution of the European database right as a result of judicial interpretation.i
Guernsey’s IP regime is contained in primary and secondary legislation. The relevant primary legislation was enacted in The Intellectual Property (Enabling Provisions) (Bailiwick of Guernsey) Law, 2004. This Law authorised Guernsey’s legislature to introduce secondary legislation (in the form of ‘Ordinances’), for individual IPRs on an incremental basis, without further reference to Her Majesty in Council.
The first output of secondary legislation came into force on 1 January 2008. Ordinances are now in force in relation to copyright, database rights, performer’s rights, registered designs, unregistered designs, trade marks, patents, image rights and registered plant breeders’ rights.
The umbrella-like structure of Guernsey’s enabling legislation is advantageous. Not only does it allow Guernsey to enact Ordinances very swiftly, it permits Guernsey maximum flexibility to introduce future amendments so as to keep pace with technological advances.
An Intellectual Property Office for Guernsey, headed by the Intellectual Property Registrar, opened on 1 June 2006. More information about the Intellectual Property Office and relevant contact details can be found on the Intellectual Property website at http://www.guernseyregistry.com/ipo.
Legislation which has been enacted to date includes:
- The Copyright (Bailiwick of Guernsey) Ordinance, 2005;
- The Database Rights (Bailiwick of Guernsey) Ordinance, 2005;
- The Performers’ Rights (Bailiwick of Guernsey)Ordinance, 2005;
- The Registered Designs (Bailiwick of Guernsey) Ordinance, 2005;
- The Unregistered Design Rights (Bailiwick of Guernsey) Ordinance, 2005;
- The Trade Marks (Bailiwick of Guernsey) Ordinance, 2006;
- The Unregistered Design Rights (Semiconductor Topographies) (Bailiwick of Guernsey) Ordinance, 2006;
- The Registered Plant Breeders’ Rights (Bailiwick of Guernsey) Ordinance, 2007;
- The Registered Patents and Biotechnological Inventions (Bailiwick of Guernsey) Ordinance 2009; and
- The Image rights (Bailiwick of Guernsey) Ordinance, 2012.
Why Hold IPRs in Guernsey?
From a business perspective, Guernsey’s corporate tax regime is advantageous for holding IPR’s in a tax neutral environment. On a broader level, Guernsey’s sophisticated infrastructure includes a suite of corporate vehicles which offer enhanced business flexibility as compared to other jurisdictions. Trusts Guernsey has long been a prime jurisdiction for the formation and management of private trusts, which can be useful tools in the creation of off-balance-sheet structures. In this regard, Guernsey introduced new legislation in relation to trusts in 2007 which allows a much more flexible approach to holding assets in a trust structure.
Protected Cell Companies The protected cell company (“PCC”) was pioneered in Guernsey in 1997. A PCC is a single legal entity. However, the company is made up of a core and a number of ring- fenced, protected cells. The advantage of the PCC lies in the segregation of assets and liabilities – the assets of one cell will not be available to creditors of other cells in the event of insolvency. A PCC structure is therefore ideally suited for entities involved in product development, in view of the scope for isolating and managing R&D and product development risk.
Incorporated Cell Companies
In 2006 Guernsey introduced legislation to create a similar structure known as the incorporated cell company (“ICC”). As with a PCC, an ICC will have cells. However, each cell is a separately incorporated and distinct legal entity.
Why might one use an ICC rather that a PCC? The ICC structure may allow the cells to exploit their status as independent legal entities, for example by the cells contracting with each other, which might be useful for the purpose of licensing agreements.
Guernsey offers a unique environment for IP protection and exploitation, compared to other offshore and indeed some onshore jurisdictions. With TRIPS cornerstone legislation and recognition in place, Guernsey’s attention can now turn to the enhancement and protection of ground breaking IPRs.