One of the more common issues we get asked about involves the use of U.S.-origin claims (e.g., “Made in USA”) on products. Given that the rules for making such claims can seem counterintuitive (e.g., just because a product is made here does not mean it can be labeled “Made in USA”), such claims are often a trap for the unwary. A recent class action lawsuit filed in U.S. district court in California is a useful reminder of this for all companies that utilize a U.S.-origin claim on its products, or who sell other companies’ products that contain a U.S.-origin claim.
The lawsuit was filed by a consumer against an apparel manufacturer and a major U.S. retailer involving the manufacturer’s use of U.S.-origin claims. The complaint alleges that the manufacturer and the retailer unlawfully labeled and marketed apparel as “Made in the U.S.A.” when several of the components (e.g., fabric, thread, rivets, buttons, etc.) were in fact manufactured outside of the United States.
The U.S. Federal Trade Commission (“FTC”) has strict requirements for making unqualified U.S.-origin claims, such as “Made in USA”. The FTC rules require, among other things that the product contain “all or virtually all” U.S. content (generally, viewed as 95%+) in order to be eligible for an unqualified U.S.-origin claim.
In addition to this federal standard, California has its own “Made in USA” rules (these rules were also implicated in the lawsuit), which impose an even higher standard for unqualified U.S.-origin claims. The California rules generally have been interpreted by the courts to require 100% U.S. content.
Given the high bar for making U.S.-origin claims, companies need to be extra vigilant in this area. Such claims are often scrutinized by competitors and/or consumers and, as the above case shows, often become targets for enforcement.
We hope this is helpful. If you have any questions about the different requirements for making unqualified or qualified U.S.-origin claims, or how to administer compliance programs for products that are marketed as U.S.-origin, please let us know.