I guess I should take it as a compliment but I dont
I have just been sent a link to a series of tax blog entries posted by US law firm, Sheppard Mullin, which heavily relies on or copies from materials I have written for this site.
Compare (from Instalment 1 of the Sheppard series) the following with a blog entry I wrote here on the general anti-avoidance rule (see the middle from where it says “The General Anti-Avoidance Rule”):
The introduction of the GAAR is contained in three documents: the Enterprise Income Tax Law (“EITL”), the EITL Implementing Regulations, and the Notice of the State Administration of Taxation on Issuing the Measures for the Implementation of Special Tax Adjustments (for Trial Implementation) (“Measures No. 2”). The SAT has also indicated that it will aggressively use the GAAR to target offshore transactions.
Article 47 of the EITL empowers the SAT to make a tax adjustment where a transaction results in a reduction in taxable income or has no reasonable business purpose. There is “no reasonable business purpose” as defined by Article 120 of the Implementing Regulations of the EITL where the main purpose of a transaction is to reduce, be exempt from, or defer the payment of taxes.
Anti-avoidance investigations, according to Article 92 of Measures No. 2, will target the following offenses:
- Abusing tax preferences;
- Abusing a tax agreement;
- Abusing the corporate organizational form;
- Avoiding tax through a tax haven; and
- Any other arrangement without a reasonable business purpose.
Investigations will follow the principle of “substance prevails over form,” which is outlined in Article 93 of Measures No. 2 and requires that the following issues be considered:
- The form and substance of an arrangement;
- The time of conclusion and the period of execution of an arrangement;
- The manners for realizing an arrangement;
- The connections between different steps or components of an arrangement;
- The changes of financial status of each party involved in an arrangement; and
- The tax results of an arrangement.
Articles 94, 95, 96 and 97 elaborate on the methods through which investigations are conducted and tax benefits are canceled, and on other detailed issues.
The sentence I have highlighted in bold actually comes from a M&A tax article that I wrote.
Now compare that article on M&A Tax in China with Instalment 2 and Instalment 3 of the series. What you will notice is that, whilst the language has changed slightly, the exact same structure has been adopted, including names for headings and sub-headings. Despite the change in wording (which isnt great) a few things give the game away:
- Firstly, Sheppards refer to the fact there are two types of mergers in China. This type of detail wasnt necessary and I only added it in my original article because I wanted to better illustrate the difference between a merger and asset acquisition. It really makes no sense to point this out otherwise and I highly doubt another person would have had the same thought.
- Secondly, compare this sentence (from my article):
- Thirdly, the Sheppard series doesnt mention demergers, a critical issue for M&A in China, and something that should be considered in any comprehensive analysis. So why doesnt Sheppard mention this? Because I didnt. I got a bit lazy and left this out of my article as I wanted to get it published asap.
Recent DTA interpretations by the State Administration of Taxation placing considerable doubt upon previously conceived tax benefits obtained from incorporating special purpose vehicles in particular low tax jurisdictions.
with this sentence from Sheppard’s blog:
the new tax law also outlines specifics M&A and liquidation tax rules and places doubt on previously conceived tax benefits from incorporating SPVs in some low-tax jurisdictions
Am I being paranoid with all this?
I dont think so. It seems fairly obvious that my work has been the source of, and copied, by Sheppard. This annoys me, particularly as Sheppard is a relatively large firm that is, presumably, generating significant revenues. By contrast, I work for a small firm with a marketing budget around 1/1000th of Sheppard’s marketing budget (probably even lower). I work hard (mainly on my own time) to make this site what it is and this kind of stuff makes me question if it is worthwhile. So I can definitely say that I dont take this kind of thing as a compliment. Whether the changes are enough to get around my copyright is irrelevant – it is extremely bad form.
I have pointed out this similarity to the writer. I hope the firm has the good grace to take down these posts and to cease from copying my writing in the future. I accept that this is probably just a case of a young associate facing billable hours pressure trying to get their job done and that senior people within the firm had no knowledge of this.
UPDATE 19/3/2010: I had taken this post down since last weekend after I came to an understanding with Sheppard that the relevant posts would be revised. Sheppard has now posted the “revisions” and whilst some changes have been made, it is still substantially my work. In particular, Instalment 1 still copies a large slab of a post I did on this site as I mentioned above. Rather disappointing to be honest.
Matthew, I don’t think you’re being paranoid. I also think your hunch of what has happened is likely to be right – someone down the chain has thought they would get away with it. I hope the right action is taken.
I won’t suggest you take it as a compliment, since you’ve made it clear that you really don’t! But I will say please don’t let this sort of thing deter you. Your site is my No 1 China tax resource and the benefit of your incisive and reasoned analysis definitely makes a difference to people.
Geraldine thanks for the support. I dont seriously think I am being paranoid. I have a very particular writing style (some would say contrived) and the reason why I noticed the similarities and blatant copying was that it sounded like something I wrote. This is not the first time this has happened (I am not talking about Sheppard Mullin) albeit it is by far the most blatant example. I have given the benefit of the doubt on the other occasions but this time I am not prepared to.
Dont worry I dont really intend to stop doing China Tax Insights. I have enjoyed the freedom of writing on here too much. As lawyers I think we are taught to write in a very methodical manner but on here I can be a bit more loose and natural with my writing. My writing has benefited from the process.
I guess if I receive an apology and if the material is taken down will be signs of whether this conduct was merely the overeagerness of a young associate. Time will tell. There has been no apology yet (even though I have received numerous hits from Sheppard IP addresses) but law firms tend to move pretty slowly. A simple email acknowedging my concerns and indicating that they are looking into it would have been nice for the time being though.
If I dont receive an apology and the material is not taken down soon I will explain further why I dont consider it as a compliment. For the time being I will give Sheppards an opportunity to rectify this “mistake”.
Thanks for the support again and I am glad the site is a useful resource as that is the primary reason why I started it.