Virgin Islands Law Blog

Virgin Islands Law Blog

U.S. Virgin Islands law & politics

What Protections Are Available Under U.S. Copyright Law?

Posted in Litigation

bookU.S. copyright law can be very difficult to truly understand, and the technological developments over the past decade couple decades have complicated matters to the extent that the law is still very much in flux.

In the United States and its territories, the ability to copyright a work requires that the work be the original, fixed and tangible creation of a specific author. This classification covers a variety of works, including literature, music, drama, dance, visual art, architecture, motion pictures and sound recordings. These categories are intentionally broad. Among the materials not covered by copyright are any works that haven’t been tangibly fixed, as well as titles, slogans, phrases, ideas, concepts and works composed of common information.

One of the major factors in this area of the law is the necessity of gaining permission to use copyrighted material. Material that can be used without seeking permission is referred to as being in the public domain. In the U.S., any materials created prior to 1923 are in the public domain and can be used freely — this is why you can walk into a bookstore and find a dozen different versions of “The Adventures of Huckleberry Finn.” However, this particular provision of U.S. copyright law is probably the most straightforward.

Works created and published from 1923 to 1977 are protected by copyright for 95 years. Works published after 1977 are protected for 70 years after the death of the author. In all of these circumstances, there are additional exceptions and quirks that may affect the copyright protection of a particular piece of work.

Another key debate in copyright claims comes down to what constitutes fair use. In determining whether fair use has been violated, the court will look at several factors. Most important is the way in which the material was used. For instance, use that transforms or illuminates the original material — such as in criticism, commentary or scholarly contexts — is usually considered fair. The proportion of material used also makes a difference, with the general guiding principle being that the smaller the proportion used, the more likely the use was fair. Finally, if the material was used primarily for commercial purposes, or to compete with sales of the original, such use is typically going to be considered a violation of the principles of fair use.

As copyright law is changing and new issues are always being brought to the attention of courts, it’s somewhat common to have questions or concerns about the status of your own copyright or about your use of someone else’s intellectual property. Consult an attorney to learn more about your rights and obligations.

BoltNagi is a well-respected and established intellectual property law firm serving individuals, businesses and organizations throughout the U.S. Virgin Islands.

USVI Senate Considers Expanded Preferred Vendor Status to Local Contractors

Posted in Government Relations

workerBill No. 30-0438, a U.S. Virgin Islands Senate bill approved in committee at the end of October could, if passed, pave the way for local contractors to receive additional priority when bidding for government contracts in the territory.

Local contractors already have significant standing when it comes to government contracts. Under the terms of the “Preferred Provider Act of 1971”, the Department of Property and Procurement is compelled to accept the bids of local contractors, provided those bids do not exceed the amount of the lowest outside bid by more than 15 percent.

The new legislation, sponsored by Senator Diane Capehart, would pull a variety of other agencies under the umbrella of the law. This would mean that, for example, contracts offered up for bidding by the University of the Virgin Islands, the Virgin Islands Water and Power Authority and any hospitals in the Territory would be subject to the terms of the Preferred Provider Act. As a result, a wider range of contracts would be available to local providers.

The law has actually been amended a number of times since its initial passage. Among the changes have been severe reductions to bonding requirements. For bids of less than $300,000, bonds cannot exceed 2 percent, and for bids of more than $500,000, the bond cap is 5 percent. Meanwhile, contractors are also subject to performance bonds of 25 percent of the total bid.

However, some government contractors believe that even these limits result in surety bonds that are difficult for smaller contractors to post, and prevent companies that could perform necessary work from bidding on jobs that they could efficiently and skillfully complete. In response to these concerns, the new proposal allows a means for contractors to avoid bid and performance bonds altogether by offering other options. Among these is a provision that would require 20 percent of the performance bond cap of 25 percent of the bid to be placed in escrow. For a $200,000 contract, for example, a builder would merely need to put $10,000 in escrow rather than the $50,000 that would be required under the existing law.

With the proposed changes in Bill No. 30-0438, local contractors may find themselves with a considerably larger selection of contracts available to them. If the bill becomes law, the role of local contractors in the U.S. Virgin Islands economy could expand significantly in a relatively quick timeframe.

BoltNagi is an established and well-respected government relations law firm serving clients throughout the U.S. Virgin Islands.

Film Shoots Coming to US Virgin Islands

Posted in Community Affairs

film crewPending legislation could mean an increase in the film industry’s already booming business in the U.S. Virgin Islands, according to a source familiar with the industry’s workings in the Territory. The legislation could be passed as soon as the end of the year.

For now, shooting in the U.S. Virgin Islands offers no major tax benefits, but even without the incentives built into U.S. tax code, the Territory has done well in attracting numerous films and television shows. Steve Bornn, Development Manager of Film USVI, notes that his organization has done more than $20 million in business in the past five years, with an increase in local employment opportunities among the top benefits.

In recent years, films such as “Twilight Saga: Breaking Dawn” and “The Curious Case of Benjamin Button,” both shot in the U.S. Virgin Islands, have done much to raise the Territory’s profile within the film industry. This year, a significant amount of the business has come from reality television and advertising. CBS, the Travel Channel, HGTV and PBS have all shot episodes of popular series here, and Princess Cruises, Izod, Seagram and Nordstrom are just a few of the companies that have filmed commercials in the Territory.

Currently, the major attraction for shooting in the U.S. Virgin Islands includes the absence of sales tax, as well as an exemption from taxes, duties and bonds associated with importing film equipment and accessories. According to Bornn, the proposed legislation would bring the Territory more in line with many U.S. jurisdictions in terms of the incentives provided for film production. Among the proposed perks are a variety of tax credits and rebates.

In addition to the job creation, having a thriving movie production industry in the U.S. Virgin Islands would likely mean major gains for local businesses, development and much-needed improvements to existing infrastructure, in addition to an increase in tourism. Similar benefits have already appeared in other areas that have taken measures to attract film production, with New Orleans, since Hurricane Katrina, setting a particularly strong example for what can happen when localities encourage the film industry to set up shop in their regions.

As the U.S. Virgin Islands looks to establish the Territory in realms outside of tourism, the legislation now under consideration in the Senate could lead to a boom in the Territory’s film industry.

BoltNagi is a widely respected and well-established government relations law firm serving businesses and organizations throughout the U.S. Virgin Islands.

Choosing the Right Business Entity for Your Startup

Posted in Corporate & Financial Services

Creative Commons license courtesy of Gratisography.Of all the important decisions you need to make when starting a new business, the choice of business entity is one that carries a lot of weight and demands a considerable amount of thought. One reason this decision demands such careful planning is because there are so many available options, and they all have different benefits and drawbacks.

The following are the four general options available when choosing your business entity:

Sole proprietorship

If you’re looking for a simple arrangement that involves no one but yourself, a sole proprietorship might be the way to go. With this entity, your business expenses will come directly from your personal funds. Although it may appear to simplify things in the short term, it can make your tax situation more complex. A lawsuit or any business-related financial trouble can thus have serious impact on your personal finances, as your funds are not separated.

Partnership

A partnership brings with it the stability of having more people than just yourself involved in your startup, as well as the increased funding that your partners may provide. Determining roles and responsibilities can be complicated, however, and there’s still the challenge of keeping business and personal finances separated. A related option is a limited partnership, which involves the selling of limited partnership interest and has the advantage of providing additional funding without requiring too much involvement from your limited partners.

Limited liability company

The first major benefit of a limited liability company (LLC) is the separation of your personal and business finances. Managing an LLC can often be left to all of the members, but some LLCs choose to appoint a specific individual to the top management role—or even several individuals to fulfill specific roles, such as president, treasurer or any other traditional official role. It’s important to establish, in writing, the specific roles to be performed by the members of any LLC.

Corporation

Forming a corporation is more expensive and carries considerably higher tax burdens than other types of business entities, but for startups in search of funding from venture capitalists, it may be a great option. Corporations also require more official structuring and the completion of a variety of legal and financial requirements. But once a business is able to incorporate, the status that comes along with it can offer numerous benefits.

These are just several of the options available, and other possible business entities could also be on the table for your startup. To find out more about your options and to discover what’s best for your situation, speak with an experienced business law attorney.

BoltNagi is a respected and established business and corporate law firm serving clients throughout the U.S. Virgin Islands.

How Can Businesses Defend Against Wrongful Termination Claims?

Posted in Labor & Employment

Creative Commons license courtesy of Gratisography.Most states and territories throughout the U.S. operate under the concept of employment at-will, meaning that an employer can terminate an employee for virtually any reason or for no reason at all, as long as the reason for termination is not related to federally protected categories such as race, sex, disability or age — or to the employee’s status under the Family and Medical Leave Act.

The U.S. Virgin Islands, however, has legislation on the books that specifies the conditions under which an employer may terminate certain workers. A termination for other reasons may be considered wrongful and could leave the employer open to a lawsuit.

The U.S. Virgin Islands “Wrongful Discharge Act” applies to employers with five or more workers, and only protects non-supervisory employees who have worked for more than six months at their job. Under the law, employees may be terminated for a number of very specific reasons. These include working for a competing business, poor behavior toward customers, substance abuse, failure to follow instructions, poor work habits, frequent absence, incompetence or inefficiency, dishonesty and conduct that alienates other employees. A business that ceases operations or is forced to cut back on its workforce due to economic hardship may also terminate workers.

Naturally, the precise language of the “Wrongful Discharge Act” may be open to interpretation, and employees who feel they have been wrongfully terminated could seek legal action. Because no company wants to be involved in a wrongful termination claim, it’s important that business owners protect themselves against such claims by preparing in advance for the possibility of litigation. Fortunately, this can be achieved by taking some routine actions during an employee’s time with the employer and prior to terminating the worker.

First, an employer should establish clear, fair and consistent standards for documenting an employee’s performance, including attendance, verbal warnings or discussions, incidents involving customers or other employees and anything else that may be relevant. The key is making sure that the standards for documentation are equally applied to all employees. Unequal documentation could result in the employer being accused of discriminatory practices.

Second, use the employee’s regular performance evaluation as an opportunity to ask open-ended questions to glean information that might indicate whether the worker believes they are being subjected to any type of discrimination or harassment in the workplace. Employers can use this information to aid in remedying negative workplace behaviors, and evidence of effort on the employer’s part can protect a company against claims of discrimination and harassment. At the same time, an absence of evidence of such problems can also protect the employer from wrongful termination claims.

Finally, it’s a good idea for an employer to seek legal counsel prior to terminating an employee, especially when termination may seem contentious. Having the appropriate documentation ready will allow the employer to proceed with confidence and hopefully avoid a difficult lawsuit.

BoltNagi is a widely respected and well-established labor and employment law firm serving businesses and organizations throughout the U.S. Virgin Islands.

Zozaya: Putting Politics Aside Would Help USVI Tourism

Posted in Community Affairs, Government Relations

marketAt the 2014 State of the Industry Conference organized by the Caribbean Tourism Organization in St. Thomas, keynote speaker Apple Leisure Group CEO Alex Zozaya emphasized the importance of keeping politics and bureaucracy out of the tourism industry if it’s expected to grow. Instead, Zozaya said, tourism should be run like the business that it is, with emphasis on attracting tourists with ease of access and the promise of an authentic, unique experience.

In bemoaning petty political squabbles, Zozaya made clear the importance of keeping politics, for its own sake, out of areas that are particularly prone to the effects of conflict. While labor, investment and trade laws might be necessarily political in some ways, Zozaya challenged conference attendees to focus more on the importance of tourism as a product. Policies that affect tourism should be structured to improve the product rather than to achieve political ends.

Zozaya noted that one of the major factors for international tourists in determining where to vacation is the severity of visa requirements. Less restrictive visa requirements make a location much more attractive to travelers, especially those who may have little travel experience under their belts. On a related note, Zozaya mentioned that 40 percent of travelers who used the services of Apple Leisure Group in the past couple years have been Americans traveling abroad for the first time. The proximity of the U.S. Virgin Islands and the entire Caribbean region to the United States, he said, is an asset other tourist destinations would love to have.

However, the importance of preserving the unique cultural identity of every Caribbean island should also be a part of the long-term plan for attracting and keeping tourists. The tourism experience on each island needs to authentically reflect the territory’s culture and traditions, discouraging the perception that a trip to St. John amounts to a trip to the U.S. Virgin Islands and, by extension, that a trip to the USVI constitutes a trip to the Caribbean.

In the U.S. Virgin Islands, travel and tourism account for about a third of jobs and nearly a third of the territory’s gross domestic product. It’s also a key source of investment money in the region. The factors pointed out by Zozaya are just some of the things U.S. Virgin Islands policymakers need to think about in the coming years as the Territory looks to increase the efficiency, hospitality and economic benefits of the tourism industry.

BoltNagi is a widely respected and well-established government relations law firm serving individuals, businesses and organizations throughout the U.S. Virgin Islands.

Federal Estate Tax Could Be Permanent

Posted in Tax & Estate Planning

estate taxThe federal estate tax, a source of consternation for many who believe personal wealth and assets should be freely transferable to family, friends or charities after a person dies, seems to have become a permanent fixture of U.S. tax law. However, opposition to the estate tax — which some opponents have dubbed the “death tax” — doesn’t seem to be going away. There may yet be a battle over the future of this tax.

The estate tax currently applies only to estates of more than $5.34 million, with these estates subject to a maximum rate of 40 percent. The current rate was signed into law on January 1, 2013, as part of the “American Taxpayer Relief Act”, which set an exemption amount of $5 million indexed to inflation. The 40 percent maximum did not change.

Prior to 2013, the estate tax had an interesting recent history. Under President George W. Bush, who signed the “Economic Growth and Tax Relief Reconciliation Act of 2001”, the estate tax was slated for a gradual phase-out by combining annual increases in the exemption amount (which was just $675,000 in 2001) with the lowering of the maximum rate of taxation. This was to culminate in a total repeal, and in 2010 the estate tax was eliminated. However, the “Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010” reinstated the estate tax, and the 2013 law used the 2011 amounts as a starting point.

Many of those who are against the estate tax argue that it penalizes people who have found success in life and harms small businesses and farms to the point that some may have to close. It also, opponents say, amounts to a redistribution of wealth from those who earn to those who do not.

Proponents of the estate tax, however, believe that the tax helps prevent the concentration of wealth among very few people, has little to no effect on small businesses due to the $5 million exemption and raises a comparatively small but still substantial amount of money each year for the U.S. Treasury. They also argue that the estate tax encourages the descendents of wealthy Americans to contribute productively to society, rather than sit back and enjoy the vast wealth accumulated by those who came before them.

For these reasons, the estate tax is a subject of considerable debate. Much may depend on the results of the November election, as a shift in control of the U.S. Senate could result in renewed calls for repeal of the federal estate tax if the makeup of the legislative branch seems more likely to support it. 

BoltNagi is an established and respected estate planning law firm serving individuals and families throughout the U.S. Virgin Islands.

Possible Changes on the Way for Divorce Law in U.S. Virgin Islands

Posted in Family Law & Children's Issues

gum on shoeIf a recently approved bill becomes law, it could mean major changes to the division of property during divorce proceedings in the U.S. Virgin Islands. The Legislature of the Virgin Islands approved the bill, sponsored by Sen. Nereida “Nellie” Rivera-O’Reilly, which would allow divorce courts to determine the distribution of property acquired during the course of a marriage, but Governor John de Jongh vetoed it citing an unrelated amendment regarding casinos. There will still be some exceptions related to gifts, inheritances and judgments, but the new measure would represent a considerable change from existing divorce law in the Territory.

Currently, the principle of community property holds sway. This means that any property owned separately by one of the parties remains in the ownership of that person. Meanwhile, community property, which is the assets acquired during the marriage, is divided on what is determined to be an equitable basis. It is possible, however, for all property to simply be put under one spouse’s name, which in the event of a divorce, would leave the non-owning spouse with nothing, regardless of the length of the marriage.

The new bill would work around some of the complex issues related to property in a divorce by offering a clear definition of marital property as “all real and personal property acquired by either spouse subsequent to the marriage,” and then outline the exceptions to the definition. These exceptions are as follows:

  • Property acquired via bequest, gift or descent
  • Property collected in exchange for property attained before the marriage, or in exchange or property acquired via bequest, gift or descent
  • Property a spouse attains after the legal separation decree
  • Any judgment or property obtained by judgment awarded to a spouse from the other spouse
  • Property excepted through a valid written agreement between the parties
  • Income from property acquired by a method listed in subparagraphs A thru E of section 109(a) of the original statute

In other words, where divorce courts once had jurisdiction over only marital homestead and personal property, the new legislation if eventually adopted would put marital property as newly defined under the court’s jurisdiction as well. This could close a loophole and allow for a more equitable division of all property during divorce proceedings.

For those wondering whether the new law could be applied retroactively to finalized divorce cases, the answer is no — the new law if adopted will only be associated with current and future divorce cases. However, its potential enactment may result in some major reconsiderations for those currently thinking about or pursuing a divorce in the U.S. Virgin Islands.

BoltNagi is a well-established and widely respected family law firm serving clients throughout the U.S. Virgin Islands.

USVI Government to Guarantee Developer Leases

Posted in Corporate & Financial Services, Government Relations, Real Estate

drink on beachA bill recently passed in the U.S. Virgin Islands Legislature would allow the Government of the Virgin Islands to guarantee up to $20 million of hotel developers’ leases for up to 25 years, a move that supporters cheered as a boon to the islands’ economic development.

Under the legislation, the Public Finance Authority would have the power to issue loans backed by the full faith and credit of the Government of the Virgin Islands. St. Croix, in particular, stands to benefit from the legislation, as the island is suffering from a lack of new hotels despite there being a number of incentives for new hotel construction.

Some lawmakers had expressed concern about what should happen in the event of a developer failing to pay. However one of these officials, Sen. Janette Millin Young, says she was reassured that there would be sufficient preliminary measures established to prevent the government from having to spend unnecessary money on this program.

The construction of new hotels should provide a welcome economic boost to the U.S. Virgin Islands, as the economy is heavily reliant on tourism. On average, 680 cruise ships stop in the Territory each year, carrying 75 percent of the Territory’s 2.6 million annual visitors on shore. But because hotel construction has stalled lately, there are only about 5,000 hotel rooms available on the islands, putting considerable strain on the hospitality industry.

Tourism contributes to the local economy indirectly, as well. For example, rum taxes paid by visitors bring in another $80 million each year. However, much is dependent on the ability of hotels to accommodate these visitors, and it is hoped that the lease guarantees provided under the new legislation will jumpstart the much-needed development in the hospitality sector.

Although St. Croix is the largest island in the Territory, its local focus on smaller, more intimate tourist lodging leaves it in particular need of additional hotels. Adding to the strain has been the closure of the HOVENSA oil refinery in 2012, the economic effects of which still linger on the island. The 2011 Hotel Development Act was expected to spur major development activity, but a $500,000 annual fee included in the law proved to be restrictive to all but the largest hotels.

Between the lease guarantee and a change to the fee structure that will be more conducive to smaller and medium-sized hotels, it appears the days of insufficient hotel development on St. Croix, and throughout the Virgin Islands, may be approaching an end.

BoltNagi is a widely respected and well-established government relations law firm serving individuals, businesses and organizations throughout the U.S. Virgin Islands.

Case Examines the Rights of Condo Associations to Force Unit Auctions

Posted in Litigation

vacantVacant units at the Sapphire Beach condominiums on the East End of St. Thomas, U.S. Virgin Islands are at the center of a recent complaint submitted to the territorial court on behalf of condo unit owners, who claim the failure of the owners of those since-vacated units to pay common charges has put considerable financial burden those who remain in good standing.

The owners who filed the complaint have had to assume payment of those charges themselves, as well as forego necessary maintenance and other improvements and enhancements to common property. James Derr, the attorney for the Sapphire residents, says the condo association has missed out on about $250,000 in uncollected fees for both the units and marina slips.

In all, 13 condo units and eight marina slips at Sapphire Beach are vacant. Unfortunately, Sapphire Beach cannot simply sell those units to new buyers because there are liens on the properties, and until the lien-holders are paid or the liens are removed, foreclosures cannot be finalized. Bayside Resort Inc., the owner of record for the properties in question, owes property taxes on the units going back to 1999, in amounts somewhere between $35,000 and $40,000 per unit.

Because there has been no progress in collecting payment, the Sapphire Beach condo owners filing the complaint have asked the U.S. Virgin Islands government to auction off the condo units and marina slips in question. An auction, according to Derr, would likely result in what he described as “a long line of bidders” hoping to purchase the vacant units and marina slips.

The complaint comes on the heels of a recent audit report that criticized the Office of the Lieutenant Governor for its mishandling of property auctions in recent years, and is sure to keep attention focused on that office as it makes its way through the court system.

One factor that makes the Sapphire Beach condo owners’ complaint interesting is that the homeowners’ association filed the complaint as a taxpayer, citing a law that gives taxpayers the right to sue to force the Government of the Virgin Islands to enforce laws. In this case, the law in question provides for the public auctioning of property as a way of settling outstanding tax debts. Although this particular law has rarely been cited, it has come up in some pivotal cases during the time since the taxes on some of those Sapphire Beach condominiums were last paid.

Because the Sapphire Beach condominium association had previously asked the government to collect outstanding property taxes, and those pleas were met with silence, the hope is that filing this formal complaint will finally settle the matter.

BoltNagi is a widely respected and established real estate and government relations law firm serving individuals, businesses and agencies throughout the U.S. Virgin Islands.