Among those tied to the release of what have been coined the Paradise Papers, the trove of documentation revealing the inner workings of the world’s wealthiest when it comes to fashioning preferable tax arrangements, are Nike and LVMH Moët Hennessy Louis Vuitton chairman Bernard Arnault. Taylor Swift also made headlines this week, as her legal team threatened an indie blogger with a defamation lawsuit over an article that it paints Swift as a white supremacist. And in the United States’ ever-developing intellectual property war with China, the country’s customs agency reports upward of 1,560 cases of infringement.
Preferable Tax Terms? Just Do It.
In the mix among the many high net-worth individuals and companies named in the Paradise Papers were a few of interest to the fashion industry. One brand that was name-checked in the bounty of leaked documents published by the International Consortium for Investigative Journalists: Nike.
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According to documents uncovered as a result of the leak, which totaled more than 13.4 million documents, the Portland-based activewear giant is using its famous intellectual property — including its world-renowned “Swoosh” mark, famous “Just Do It” phrase, and presumably its many valuable patents — as a way to enjoy preferable tax treatment. As asserted by the ICIJ, Nike established a Bermudan holding company, Nike International Ltd., in 2006 with authorization from the Dutch government (Nike’s European headquarters is in the Netherlands), through which it maintains its non-U.S. intellectual property rights.
The ICIJ revealed that the company has been able to collect royalty payments for others’ non-U.S. uses of its IP through Nike International Ltd., thereby enabling the firm to collect a reported $6.6 billion in offshore profits by June 2014. Nike’s response to questions about the tax arrangement? “Nike fully complies with tax regulations.”
Nike is not the only one in fashion’s ranks with ties to the latest batch of tax-related documentation. Arnault was mentioned in connection with an English residence that was held by a holding company in Jersey — the largest of the Channel Islands, between England and France, known for its tax breaks.
Arnualt spoke out on the heels of the reports to confirm that both French and British tax authorities were well aware of the home and that it was, in fact, subject to a French wealth tax.
“Swiftly to the Alt-Right”
Vogue’s May cover girl Taylor Swift is at the center of one of the week’s most eye-catching legal developments. The singer and her legal team at Venable LLP made headlines after sending a strongly worded cease and desist letter to a Northern California blogger who penned a lengthy blog post, titled “Swiftly to the Alt-Right: Taylor Subtly Gets the Lower Case kkk in Formation,” in which she accuses Swift of being a “white supremacist figurehead.”
Unsurprisingly, Swift and her camp did not take kindly to the article, which Meghan Herning published in early September on Popfront.com, and in which she argued that Swift’s song lyrics, her failure to publicly endorse Hillary Clinton and her unwillingness to speak out against white supremacists means that she must “support racial hierarchy.” As such, Swift and co. threatened to sue Herning for defamation.
The American Civil Liberties Union of Northern California has stepped in to represent Herning, penning a response to Swift’s counsel and denouncing what it has called “unacceptable…intimidation tactics.” The ACLU stated that it believes Herning’s post is “a mix of political speech and critical commentary” that amounts to “constitutionally protected speech.”
The ACLU requested that Swift’s counsel confirm that they will not file suit against Herning by November 13.
IP Developments in China
China’s General Administration of Customs revealed that it will “actively promote increased cooperation with customs administrations of all countries and regions to jointly fight and comprehensively manage intellectual property rights,” as the entity said that it uncovered upward of 1,560 cases of intellectual property infringement involving goods exported to the United States this year alone.
One such case, according to the Chinese customs administration, centered on 1 million yuan, or $150,659 worth of counterfeit Converse brand shoes. Another joint China-U.S. efforts this summer resulted in the seizure of counterfeit Louis Vuitton, Gucci, Rolex, and Cartier-branded goods, which would have been worth more than 20 million yuan if sold at retail as authentic.
The announcement appears to follow on from increased intellectual property-related efforts that China’s Ministry of Commerce unveiled in September, one month after U.S. President Donald Trump signed a presidential memorandum authorizing an investigation into China’s alleged “theft” of American intellectual property, including forced transfers of technology from American businesses to Chinese firms in furtherance of what the Trump administration has said enables China to gain an unfair advantage and build a dominant global presence.
It is unclear, however, whether the Chinese crackdown and the pending Trump administration investigation are directly related. Chinese authorities have been adamant since the investigation was revealed in August that it “will resort to all proper measures” to firmly defend its lawful rights if the U.S. disregards multilateral rules and hurts bilateral trade ties.
Julie Zerbo is the founder of The Fashion Law.