Critically needed: Intellectual property modernization and reform in the Cayman Islands

Steady progress has been made toward Intellectual Property (IP) modernization and reform in 2015. There is still much work to be done in order for Cayman to market itself as a real player in the international IP arena. However, the groundwork made so far should increase the confidence of local and international businesses, artists and innovators in Cayman’s commitment to a modernized IP law that offers the expected and necessary level of protection and security that their works will be safeguarded.

It is difficult to operate and develop a business with confidence, or indeed relocate existing business to Cayman, without certainty in the quality of IP protection available. Potential investors, entrepreneurs and artists may be inclined to look to jurisdictions with more advanced IP laws than those of Cayman. This is probably most common in the fields of pharmaceuticals and information technology, where IP is often the fundamental core of the business and litigation is more prevalent given the fast-paced and highly valued nature of the industries. Therefore, the economic impact of outdated IP laws can be greater than is often expected at first blush.

There are four key IP disciplines, namely, trademarks, patents and registered and unregistered designs, and in 2015, the Cayman Islands government began to tackle updates to two out of the four: copyright and trademarks. Copyright is generally considered to be the most complex discipline of the four, and this is in part due to the fact that it protects so many different types of works. These range from literary works to broadcasts, to computer programs to databases, and beyond. It is therefore to its credit that government has sought to tackle copyright reform first off the bat.

 

Legislative changes in the Cayman Islands

Taking each of the four disciplines in turn, we explore below the current and desired future landscape of IP in the Cayman Islands.

 

Copyright

Copyright protection in the Cayman Islands is currently limited to an extension of the UK’s Copyright Act 1956, that legislation being over 60 years old! The legislation offered protection to literary, dramatic, artistic, musical and architectural works, sound recordings, sculptures and more. However, the legislation could not have anticipated the progress made in technology in the years to follow (e.g. the internet and social media, the further evolution of broadcasting, etc.) and was therefore totally inadequate for the 21st century.

The first step of the modernization process was achieved in March 2015, when the Copyright (Cayman Islands) Order 2015 was extended to Cayman by the UK Privy Council. The Order revoked the extension of the UK’s 1956 Act to the Cayman Islands, and as a temporary measure, extended Part I of the UK’s Copyright, Designs and Patents Act 1988 to the Cayman Islands subject to certain changes incorporated to make it Cayman-friendly.

Although passed, the Order has not yet been implemented as the government works with the local authorities to ensure that appropriate accompanying regulations are drafted to ensure that the requirements of the new law are crystal clear. For example, one of the aspects of the new law is that copyright owners will be able to file applications with Cayman Islands Customs to put them on notice of potentially infringing goods coming into the country. Customs will have the power to seize suspected infringing goods while the copyright owner considers whether its copyright has indeed been infringed and the appropriate steps to take. Such processes naturally take time to work through, and resources need to be found and allocated accordingly on the Customs side.

It is expected that in March 2016 the Order will commence, after a few amendments are first made to the original Order to: (a) address a number of pieces of UK legislation passed before the date on which the 2015 Order was made, but which have not yet been posted on the legislation.gov.uk website; and (b) make a number of technical corrections to the Copyright, Designs and Patents Act 1988 as it applies to Cayman Islands, the need for which was revealed by the Unofficial Consolidation of the Act and 2015 Order released to the public on Nov. 16, 2015.  It is also anticipated that later in 2016 the amended 1988 Act will be repealed in Cayman and local legislation will be introduced subject to a suitable transitional period during which a full public education campaign can be completed. The main businesses thought to be directly affected are those selling copyright infringing works (e.g. counterfeit CDs and DVDs), radio stations, cafes, hotels and bars playing music and/or streaming broadcasts without the appropriate permissions.

 

Trademarksintellectual-property

Only UK trademark registrations and International (Madrid Protocol) Registrations designating the UK could be extended to Cayman up until the early part of 1998. In early 1998, the government introduced legislation which allowed European Community trademarks to also be extended to the Cayman Islands.

However, what Cayman is still lacking is an independent national trademark right. This causes much annoyance to Cayman businesses and entrepreneurs who cannot protect their trademark rights in Cayman directly; instead they must first pay a fee to either the UK Intellectual Property Office or OHIM (the body responsible for European Community applications), and then, once the appropriate foreign registration is secured, pay a further fee to the Cayman Registry to secure local protection. To make matters worse, the local protection currently paid for is 100 percent dependent on the validity of the foreign trademark registration. Trademark registrations in the UK and EU are valid for 10 years after the date of filing and thereafter must be renewed at 10 yearly intervals so that the Cayman extension can also be renewed. Furthermore, the validity of UK and EU trademark registrations can be challenged by third parties five years after the date of registration on grounds of non-use. This means that such trademarks only continue to be valid at this point if they are put to genuine use in the UK or EU, respectively, in relation to the goods and/or services covered by the trademark specification(s) at issue. Use in the Cayman Islands does not constitute genuine use of the UK / EU registration or the Cayman extension registration.

This can put proprietors of Cayman trademarks in real difficulty if their underlying UK or EU registrations are successfully attacked and invalidated on grounds of non-use (or on any of the other grounds of invalidity) and can mean that they are not protected at all in Cayman despite having initially obtained a trademark registration via the extension of the UK or EU registration.

The good news is that a new Trademarks Law is in the process of being finalized in the Cayman Islands. It is anticipated that the new law will be passed and implemented by January 2016, and come into effect by the end of the first quarter of 2016 following the approval of accompanying regulations.

The new law will make it possible for trademark proprietors to file for trademark protection in the Cayman Islands directly. The new law is heavily based on the UK’s own trademark law.

The new law provides for a full local examination and opposition process, as well as modern trademark infringement provisions and remedies, including permanent or interim injunctions, delivery up, damages or an account of profits. A key point of contrast between the new Cayman law and all other jurisdictions around the world is that Cayman will not specify a period after registration in which the mark registered must be put to genuine use in the Cayman Islands. It will not be necessary to use the mark locally at all so long as the mark is registered, and annual fees are paid each year. This increases the importance of the first-to-file system, since if a business or entrepreneur misses out on securing its desired trademark, it could be extremely difficult to recoup it from a third party.

The Cayman Registry also intends to extend the system used for the online registration of companies and the payments of annual fees to enable trademarks to be registered and subsequently maintained online by local registered agents.  This will increase efficiency, reduce time and costs spent on paper-based administration and enhance local services.

 

Patents

Patent protection is available in the Cayman Islands under the Patents and Trademarks Law, 2011 (as amended from time to time). Similarly to the current law on trademarks, UK patent registrations or European Community (EP) registrations can be extended to the Cayman Islands. The rights and remedies offered under the relevant UK patent legislation also extend to Cayman.

However, again, as with trademarks, validity of the rights long term is questionable. If the UK / EP patent falls away, so does the Cayman extension. Patents promote technological innovation and also contribute to the dissemination of technology to other innovators.

Nevertheless, if innovations cannot be adequately protected in the Cayman Islands, inventors will not invent in the Cayman Islands.

The Cayman Islands government is keen to update the patent law and introduce independent Cayman-centric legislation. One of the key aims of the new legislation will be to grant local businesses and innovators access to the international patent system. Cayman should look to join the Patents Cooperation Treaty. This would give Cayman Island-based businesses and innovators the right to apply for patent protection in PCT signatory countries all over the world.

It is hoped that work will commence on the new patent law once the new copyright and trademark laws are implemented.

 

Registered designs and unregistered designs

There is no existing registered design law in the Cayman Islands. Registered design law in the UK, for example, protects “the appearance of the whole or part of a product resulting from the features of, in particular, the lines, contours, colours, shape, texture or materials of the product or ornamentation.” Put basically, registered design rights protect the way a product looks.  A certain level of protection can be cobbled together in the Cayman Islands from other of the existing IP rights, such as e.g. copyright in a drawing. However, this is by no means an adequate level of protection.

Part III of the Copyright, Designs and Patents Act 1988, which provides for unregistered design rights, has not been extended to the Cayman. Furthermore, there is currently no way of extending UK or European Community design registrations to the Cayman Islands. As a first step, government should consider introducing legislation that allows for the extension of UK and EC design registrations to Cayman while it works on its own local legislation for both registered and unregistered designs.

When government will further consider legislating design law is currently unknown.

 

Conclusion

IP reform and modernization is a work in progress in the Cayman Islands. However, it is important to ensure that the changes made are fully thought through given the complex and far-reaching nature of the IP field. While a quick-fix solution would be for government to blindly update Cayman laws in line with the latest version of the UK law, this will not have long-lasting effect and may cause more damage than good for the unique Cayman economy. The government is fully aware of this, which is why they are giving IP legislation the time and attention it requires. The proposed changes are also likely to see an increase in government revenues.

It is hoped that strong progress will continue into 2016 and that new copyright and trademark laws will be introduced. Cayman is the only British Overseas Territory not to allow for national trademark registrations. This must change soon. Cayman is also one of the only British Overseas Territories not to have yet signed up to many key IP treaties, such as the Paris Convention, TRIPS and the Patents Cooperation Treaty. Again, this must change in order for the economy to continue to flourish and attract innovative businesses.