The lawsuit comes as Ivanka Trump expands her presence as an unpaid adviser to her father, gaining an office in the West Wing and seeking security clearance. The first daughter plans to serve as her father's “eyes and ears” and offer him “her candid advice,” as well as focus on issues that affect women in the workplace, said Washington lawyer Jamie Gorelick, who is serving as her ethics adviser.

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White House officials said that even though she is not a federal employee, Ivanka Trump will voluntarily follow federal ethics rules. “Ivanka has taken on several measures to promote high standards of ethical conduct,” press secretary Sean Spicer said Tuesday. “Even though she’s not a federal employee, she’ll follow the restrictions that would apply if she were. She’s taken these steps with the advice of counsel and in consultation of the Office of Government Ethics.”

The daily management of her company, which Ivanka Trump solely owns, is being handled by president Abigail Klem. In addition, Ivanka Trump put a trust in charge of the business and prohibited the company from engaging in any agreements with foreign officials or state-owned enterprises, according to Gorelick, who will advise both the trustees and Ivanka Trump on the implications of any new licensing deals or agreements the company is considering. Any foreign contracts will be closely reviewed, she said.

Ivanka Trump will still have veto power over any new deals, an arrangement that gives her the ability to ward off potential conflicts, Gorelick added.

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“This is new territory,” she said. “We, in our advice to her, have tried to be very conservative and to limit in any way that we can think of the conflicts that might arise from her brand while she is helping her father.”

Still, ethics experts said Ivanka Trump's formalized presence in the West Wing — even as she still owns and controls her eponymous brand — exacerbates the potential for conflicts of interest and intensifies questions about whether the White House is serving as a platform for her 10-year-old label, which includes Ivanka Trump-branded clothing and accessories.

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Conway's comments — which were followed by a spike in sales — appeared to violate a ban on federal employees using their positions to endorse products or services. The director of the Office of Government Ethics urged the White House to investigate the matter and discipline Conway, but the White House Counsel's Office rebuffed that recommendation.

Modern Appealing Clothing, a family-owned retailer in San Francisco with two stores, cited the president and Conway's comments in its lawsuit, accusing Ivanka Trump's company of having an unfair advantage in the marketplace in part by “piggy-backing promotion” of products “on appearances at executive branch and other governmental events.”

The suit is similar to one filed this month by a Logan Circle wine bar against President Trump and his Washington hotel, alleging that his ownership of the Pennsylvania Avenue property is luring away customers and damaging the wine bar's business.

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Norman Eisen, who served as the chief White House ethics lawyer under President Barack Obama, said he expects other such suits to crop up.

“None of them is a layup, but I do think the courts are going to take them seriously,” he said, adding, “I do believe that the Trump family businesses are engaged in unfair competition. The ways in which the whole Trump family uses the White House and the presidency as the world’s greatest infomercial does strike me as unfair.”