Intellectual Property Rights: assignment of "image rights"
Can “image rights” be assigned?
In recent years it has become common for celebrity sportsmen and entertainers, to assign an asset, often described as their “image rights”, to an image rights company (IRC).
As image rights are not a form of property for the purposes of CGT CG68405, unless the assignment is of a specific form of Intellectual Property Rights (e.g. a registered trade mark or copyright), the asset concerned is likely to be goodwill.
It is common for the sportsman’s or entertainer’s name to be registered as a trade mark and the individual’s signature, nickname or caricature may also be a registered trade mark. These registered trade marks represent assets within TCGA92/s21. If these rights are assigned to an IRC the transfer is often referred to collectively and inaccurately as a transfer of “image rights”. The rights in these assignments are typically a combination of rights, including trade marks, privacy rights and passing-off rights (to prevent false endorsement claims).
It is common for the IRC to exploit the individual’s “image rights” that have been assigned to it, by licensing third parties to use an aspect of the individual’s image in return for royalty payments. The sportsmen or entertainer who assigned the “image rights” to the company is often employed by the company and may be paid a salary by the company from its revenue and may receive dividends, or be provided with a loan, from company profits.
Assignment of goodwill
In the absence of any specific rights that are assets for CGT purposes, the assignment of “image rights” is likely in practice to be an assignment of goodwill. Goodwill is a personal property and its ownership can be transferred by assignment, but it cannot be assigned “in gross” - separate from the business to which it relates CG68030. An assignment in gross is invalid and the assignee acquires no rights from such a purported assignment.
It may be that an assignment of “image rights” in this context is an assignment in gross of goodwill, if the goodwill is the sportsman’s identity indicia CG68415 and the business becomes separated from the goodwill. If the business is the sportsman himself and this transaction purports to separate the goodwill in the sportsman and pass it to a company, this is an assignment in gross.
On the other hand, if a celebrity has prior to the assignment developed a business based on organised and planned exploitation of their image, for example by endorsements, personal appearances and maybe through contracts for sponsorship, copyright and so on, it is possible that such a business could have established goodwill of some value. If this existing business is transferred with its goodwill as a going concern to the IRC, there is no assignment in gross.
The strengths of the arguments for and against an assignment in gross of goodwill will depend on the facts of the individual case, including the existing reputation and nature of the business and the terms of any assignment to an IRC.