Ivanka Trump's business prospers as politics mixes with business

In this Friday, Feb. 10, 2017, file photo, Ivanka Trump, right, walks with her husband, Jared Kushner to a news conference with U.S. President Donald Trump and Japanese Prime Minister Shinzo Abe, at the White House in Washington. (AP / Evan Vucci, File)

SHANGHAI -- Since her father was elected president of the United States, global sales of Ivanka Trump merchandise have surged and the company has applied for at least nine new trademarks in the Philippines, Puerto Rico, Canada and the U.S. The commercial engine of the first daughter's brand is stronger than ever even as she builds a new political career from her West Wing office.

Sales hit record levels in 2017, despite boycotts and several stores limiting her merchandise. U.S. imports, almost all from China, shot up an estimated 166 per cent last year.

The brand, which Ivanka Trump no longer manages but still owns, says distribution is growing. It has launched new active wear and affordable jewelry lines, and is working to expand its global intellectual property footprint. In addition to applying for the new trademarks, Ivanka Trump Marks LLC has won provisional approval from the Chinese government for at least five since the inauguration.

The commercial currents of President Donald Trump's White House are unprecedented in modern American politics, ethics lawyers say. They have created an unfamiliar landscape riven with ethical pitfalls, and forced consumers and retailers to wrestle with the unlikely passions now inspired by Ivanka Trump's mid-market collection of ruffled blouses, shifts and wedges.

Using the prestige of government service to build a brand is not illegal. But criminal conflict-of-interest law prohibits federal officials, like Ivanka Trump and her husband Jared Kushner, from participating in government matters that could impact their own financial interest or that of their spouses. Some argue that the more her business broadens its scope, the more it threatens to encroach on the ability of two trusted advisers to deliver credible counsel to the president on core issues like trade, intellectual property and the value of Chinese currency.

"Put the business on hold and stop trying to get trademarks while you're in government," advises Richard Painter, who served as chief White House ethics lawyer under George W. Bush.

In fact, on April 6, Ivanka Trump's company won provisional approval from the Chinese government for three new trademarks, giving it monopoly rights to sell Ivanka brand jewelry, bags and spa services in the world's second-largest economy. That night, the first daughter and her husband sat next to the president of China and his wife for a steak and Dover sole dinner at Mar-a-Lago.

The scenario underscores how difficult it is for the president's daughter, to separate business from politics in her new position at the White House.

In a statement Tuesday, a spokesperson for the Ivanka Trump brand said that all 2017 Chinese trademarks were defensive, filed to prevent counterfeiters or squatters from using her name.

To address ethical concerns, Ivanka Trump has shifted the brand's assets to a family-run trust valued at more than $50 million and pledged to recuse herself from issues that present conflicts. She is also no longer running her design business and has given day-to-day responsibility to Abigail Klem, president of the brand. Meanwhile, her husband has taken steps to distance himself from his sprawling New York real estate business, divesting some of his business interests including his stake in a major Fifth Avenue skyscraper.

"Ivanka will not weigh in on business strategy, marketing issues or the commercial terms of agreements," her attorney, Jamie Gorelick, said in a statement. "She has retained authority to direct the trustees to terminate agreements that she determines create a conflict of interest or the appearance of one."

China, however, remains a nagging concern.

"Ivanka has so many China ties and conflicts, yet she and Jared appear deeply involved in China contacts and policy. I would never have allowed it," said Norman Eisen, who served as chief White House ethics lawyer under President Barack Obama. "For their own sake, and the country's, Ivanka and Jared should consider stepping away from China matters."

Instead, the first daughter and her husband have emerged as prominent interlocutors with China, where they have both had significant business ties. Last year, Kushner pursued hundreds of millions of dollars in real estate investments from Anbang Insurance Group, a financial conglomerate with close ties to the Chinese state. After media reports about the deal, talks were called off.

Publicly, Ivanka Trump has taken a gracious, charming approach toward Beijing. During the Mar-a-Lago meetings, her daughter, 5-year-old Arabella, stood in a gilded room and sang a traditional Chinese song, in Mandarin, for China's president, Xi Jinping. The video, which was lavishly praised by Chinese state media, played over 2.2 million times on China's popular news portal qq.com.

The week of the summit, 3.4 tons of Ivanka Trump handbags, wallets and blouses arrived in the U.S. from Hong Kong and Shanghai. U.S. imports of her merchandise grew an estimated 40 per cent in the first quarter of this year, according to Panjiva Inc., which maintains and analyzes global shipping records.

Gorelick, Ivanka Trump's attorney, said that she and her husband would steer clear of specific areas that could impact her business, or be seen as conflicts of interest, but are under no legal obligation to step back from huge swaths of policy, like trade with China.

Under the rules, Trump would recuse herself from conversations about duties on clothing imported from China, Gorelick said, but not broad foreign policy.

"In between, you have to assess it case-by-case," she said.

Trademarks can be signs of corporate ambition, though many countries -- such as China, where "trademark squatting" is rampant -- also allow for defensive filings to prevent copycats from using a brand.

Trademarks pose ethical, and possibly legal, implications for government employees because they are granted by foreign states and confer the monopoly right to sell branded products in a particular country -- an entitlement that can be enormously valuable. Intellectual property lawyers say trademarks are also a crucial prerequisite for cutting licensing deals, which form the basis of both Ivanka Trump's and Donald Trump's global business strategies.

Citizens for Responsibility and Ethics in Washington, a government watchdog group, on Tuesday expanded the scope of its federal lawsuit against President Trump to include trademark approvals from China in its list of alleged constitutional violations. The emoluments clause of the U.S. Constitution prohibits federal officials from accepting anything of value from foreign governments without congressional approval.

As a White House employee, Ivanka Trump is also subject to the same rule. "She needs to be careful," said Painter, the former Bush administration lawyer, who is advising on the lawsuit. "If her trademarks are anything but routine they also would be prohibited emoluments from the Chinese government."

The president has dismissed the suit as "totally without merit."

In a statement, Klem said the trademarks are business as usual, and in some regions to prevent "trademark infringement."

"We have recently seen a surge in trademark filings by unrelated third parties trying to capitalize on the name and it is our responsibility to diligently protect our trademark," Klem said.

Today, Ivanka Trump Marks LLC has 16 registered trademarks in China and more than 30 pending applications, along with at least five marks granted preliminary approval since the inauguration, according to China's Trademark Office database and gazette. Database filings are not immediately updated and may lag actual approvals. Altogether, they cover a wide range of goods and services, including cosmetics, jewelry, leather handbags, luggage, clothes, shoes, retail, spa and beauty services. There is no sign the recent approvals were particularly swift. China's Trademark Office did not respond to a request for comment.

Globally, the company has more than 180 pending and registered trademarks in countries including Canada, India, Japan, Israel, Mexico, Turkey and Saudi Arabia, as well as the U.S. and Europe, public records show. In December, the company applied for five trademarks, covering handbags and wallets in Puerto Rico, and lingerie and other clothes in the U.S. After the inauguration, the company filed four more applications, for branded clothing and shoes in the Philippines, and perfume and other items in Canada.

Ivanka Trump did not sign off on the new trademark applications, her brand said in a statement, adding that they are "not necessarily an indication that the brand is planning to launch a category or a store in a specific territory."

Whatever the future plans, right now sales are growing -- helped, some argue, by the glow of Ivanka Trump's political rise.

The G-III Apparel Group Ltd., which makes Ivanka Trump clothes, said net sales for the collection increased by $17.9 million during the year that ended Jan. 31.

The overall brand itself says revenues rose 21 per cent last year, with early February seeing some of the "best performance ever," according to a statement by Klem. Because it is privately held, the brand does not have to declare its earnings or where revenues come from. The actual corporate structure of Trump's retail business remains opaque. Kushner's financial disclosure form lists two dozen corporate entities that appear directly related to his wife's brand. Trump herself has yet to file a disclosure.

Data from Lyst, a massive fashion e-commerce platform, indicates some of this growth coincided with specific political events.

The number of Ivanka Trump items sold through Lyst was 46 per cent higher the month her father was elected president than in November 2015. Sales spiked 771 per cent in February over the same month last year, after White House counsellor Kellyanne Conway exhorted Fox viewers to "Go buy Ivanka's stuff." Conway was later reprimanded. The bounce appears somewhat sustained. March sales on Lyst were up 262 per cent over the same period last year.

"You can't separate Ivanka from her role in life and from her business," said Allen Adamson, founder of BrandSimpleConsulting. "Her celebrity status is now not only being fueled by her wealth and her family connection, but by her huge role in the White House. All that buzz is hardwired to her products." That, he added, is a competitive advantage other brands just can't match -- though it does come with risk.

Things could easily cut the other way for the first daughter. Ashley King, 28 of Calabasas, California, bought Ivanka Trump black flats and a cardigan several years ago. But King, who voted for Hillary Clinton, said she believes Trump's role in the White House represents a conflict of interest.

"This is bothering me more and more," she said. As for the Ivanka Trump items in her closet, she said, "I will be donating them."

AP reporter Catherine Lucey in Washington, researcher Fu Ting in Shanghai, and reporters Danica Coto in San Juan, Puerto Rico, Teresa Cerojano in Manila and Elaine Kurtenbach in Tokyo contributed to this report.