We wanted to let you know about a lawsuit the Federal Trade Commission (FTC) recently filed contesting an Ohio company’s use of U.S.-origin claims.
The complaint, filed earlier this week in U.S. District Court for the Northern District of Ohio, alleges that the company deceived consumers by making unqualified U.S.-origin claims. More specifically, the complaint alleges that the company used unqualified “Made in the USA” and “Proudly Made in the USA” claims for its glue products, when a significant proportion of the cost of the chemical inputs (~55%) are attributable to imported chemicals. A copy of the complaint can be found here.
As you know, the FTC has strict requirements for making unqualified U.S.-origin claims, such as “Made in USA”. Specifically, the FTC rules require, among other things that the product contain “all or virtually all” U.S. content (generally, viewed as 95%+ US content by cost) in order to be eligible for an unqualified U.S.-origin claim.
This case is important for a couple of reasons.
First, the case serves as an important reminder to all companies that utilize U.S.-origin claims on their products (or that sell other companies’ products that contain U.S.-origin claims) that they need to be extra vigilant in this area. Given that the rules for making such claims can seem counterintuitive (e.g., just because a product is made, or even last substantially transformed, here in the United States does not automatically mean it can be labeled “Made in USA”), such claims are often a trap for the unwary.
Second, it is important to note that the FTC is pursuing this action through litigation. Typically, the FTC’s policy is to police these types of claims administratively (i.e., closing the case without action if there is no violation, or getting the company to enter into an administrative consent order if there is a violation). Here, the FTC could not resolve the matter administratively, so is forced to sue the company in U.S. district court. This could result in the court considering whether the FTC’s “all or virtually all” U.S.-content test is appropriate/sustainable.
We will continue to monitor this case as it develops and keep you informed. In the meantime, if you have any questions about making U.S.-origin claims (unqualified or qualified), please let us know.