We are writing to provide an update on recent changes to California’s “Made in U.S.A.” standards. As you may have heard, the Governor of California recently signed legislation which will go into effect January 1, 2016, amending California Business and Professions Code to allow products containing some non-U.S. content to be labeled “Made in USA.”
The amended provision is intended to close the gap between California’s previous “Made in U.S.A.” standard and the federal “Made in U.S.A.” standard—curing a discrepancy which existed on paper for many decades, but which only took on commercial significance in recent, as the plaintiffs bar filed a number of lawsuits challenging various companies compliance with the stricter California provision.
While the goal of the new California law is clear enough, whether it will be successful is another matter. Interestingly, the new California statute does not replicate the fairly succinct and straightforward federal standard (which allows unqualified U.S. origin claims for products “all or virtually all made in the United States”). The new California statute (attached) is a bit more cumbersome. Stretching for several paragraphs, the new law:
- retains the prohibition on U.S. origin claims for products entirely or substantially manufactured outside the U.S. (or containing parts which are entirely or substantially manufactured outside the U.S.);
- creates an exception to that prohibition for products containing up to 5% non-U.S. content;
- creates an exception to that prohibition for products containing up to 10% non-U.S. content, when the non-U.S. content is domestically unavailable; and
- specifies that merchandise offered for sale outside of California “shall not be deemed mislabeled if the label conforms to the law of the forum state or country within which they are sold or offered for sale.”
Whether there remains any actionable daylight between these provisions will be up to the plaintiffs’ bar. In the meanwhile, particularly in light of that final provision, cautious optimism seems reasonable.
If you have any questions about the impact of these developments on your business, please let us know.