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HMRC internal manual

Capital Gains Manual

Intellectual Property Rights: image rights: passing-off and goodwill

Are “image rights” really goodwill?

As there is no such thing in UK law as an “image right” CG68405, unless there are identifiable Intellectual Property Rights (e.g. a registered trade mark or copyright), when an “image right” is assigned CG68420 the asset concerned for CGT is likely to be goodwill CG68010. The only meaningful protection for such rights in the UK at common law is an action in passing-off CG68410.

However, passing-off only protects the goodwill that a claimant has in his reputation. A celebrity’s identity indicia (e.g. name, voice, image, etc) is only protected if they are badges of the goodwill that he has in his reputation but it is possible for a celebrity to have goodwill in their image, just as in their name or voice. Consequently before an individual can bring an action for passing-off, he or she must establish goodwill and/or reputation in his or her identity indicia.

In The Law of Passing-Off (Sweet & Maxwell, 2011) Wadlow explains at page 7-106 when an action for passing-off in relation to a sportsman or entertainer will succeed and when it will not -

“In English law, damage to goodwill is still the gist of the action and a misrepresentation which causes no damage is not actionable. If a professional sportsman or entertainer already has a substantial income from granting endorsements or similar kinds of licence, then he has a goodwill in relation to his business as a licensor or endorser, as well as that in relation to the sporting or entertainment activities from which his fame and popularity originally derive.

In this case, unauthorised use of his name or likeness in such a way as to imply endorsement will rightly be taken to have deprived him of the royalty he would otherwise have received, whether or not he would actually have endorsed the defendant in fact and whether or not the defendant competes with any existing or prospective endorsee.

If the defendant’s goods or services, or the nature of the implied connection, are such as to debase the claimant’s reputation, then that is a further head of damage, though not one which is essential in its own right. On the other hand, if the claimant’s only relevant activity consists of his professional sporting or artistic performances then it is probably illegitimate to rely on loss of purely hypothetical licensing income as a head of damage, and the damage which is the gist of the action must be sought elsewhere. Finally, if the celebrity cannot be said to be a trader with goodwill in any relevant sense, then the action must fail.”