“Made in the USA”

1. “Made in the USA” Representations of Origin

2. History • 1980’s NAFTA and beginning of globalization led to loss of high-paying jobs • Automobile industry especially hard hit • “Buy American” equated with patriotism • Problem: many “Made in USA” claims were questionable • Particularly a problem for automobiles • “American” cars weren’t necessarily “made” here any longer

3. A. 1992 American Automobile Labeling Act • Requires manufacturers to put label on every vehicle sold in US • Label must contain the following: 1. Percentage (by value) of equipment of US/Canadian origin installed on vehicles in carline to which vehicle belongs • identified as “US/Canadian content” 2. Final assembly place for vehicle by city, state and country

4. 3. If at least 15% (by value) of equipment in a carline originated in any country other than the US and Canada • names of at least the two countries in which greatest amount (by value) of that equipment originated; and • percentage (by value) of equipment originating in each country 4. Country of origin of engine and transmission for each vehicle

5. B. 1997 FTC Enforcement Policy Statement • Applies to all goods advertised or sold in the U.S., except those covered by • Textile Fiber Products Identification Act • Wool Products Labeling Act • Fur Products Labeling Act • American Automobile Labeling Act

6. Covers all U.S. origin claims, including • labeling • advertising • all other forms of marketing • Applies to express claims • "Made in USA" and "American Made" • Applies to implied claims • use of U.S. flag, maps • references to U.S. headquarters or locations • references to "American Quality," etc.

7. Standard • Product must be “all or virtually all made in the United States” with de minimis or negligible foreign content • No “bright line” standard (e.g., 75%) • Under pressure from Congress, FTC dropped proposal to allow 25% foreign content • FTC considers claims on a case-by-case basis • Examines three key factors: • Site of final assembly or processing • Proportion of U.S. manufacturing costs • Remoteness of foreign content

8. 1. Site of final assembly or processing • Product must have been “last substantially transformed” in the U.S. • Even if all the parts are American-made, foreign assembly invalidates claim • E.g., computer assembled in Mexico from parts made in the U.S.

9. 2. Proportion of U.S. Manufacturing Costs • Greater the total cost of manufacturing attributable to U.S. costs relative to foreign costs, greater the likelihood of being "all or virtually all made in the U.S." • Depends in part on the product and consumer expectations • E.g., consumers may know that certain components are not available in the U.S. (bamboo?)

10. 3. Remoteness of foreign content • FTC will consider not only amount of foreign content but also how far removed from finished product • Further back in manufacturing process it is, less significant it will be

11. Qualifying claims of U.S. origin • Marketers may avoid problems by accurately qualifying their claims • May make general qualification • "Made in the USA of U.S. and imported parts" • May make specific qualification • "Made in the USA with 50% U.S. content” • "Made in the USA from imported leather"

12. Example 1 • Gold is imported into U.S. and then made into gold rings and other jewelry by American jewelers • Can seller claim rings and other jewelry were "Made in USA“ or “American-Made”? • “Last transformed” in the U.S. • Gold the major component of the manufacturing cost • Foreign content not remote

13. Example 2 • Company produces propane barbecue grills at plant in Nevada. Product’s major components include gas valve, burner and aluminum housing, each of which is made in U.S. Knobs imported from Mexico • Is an unqualified "Made in USA" claim likely to be deceptive? • Site of final assembly or processing • Proportion of U.S. manufacturing costs • Remoteness of foreign content

14. Example 3 • Table lamp assembled in U.S. from American-made brass, American-made Tiffany-style lampshade, and imported base. Base accounts for a small percent of the total cost of making the lamp • Is an unqualified "Made in USA" claim deceptive? • Site of final assembly or processing • Proportion of U.S. manufacturing costs • Remoteness of foreign content

15. Example 4 • Company manufactures food processors in its U.S. plant, making most of the parts, including housing and blade, from U.S. materials. Motor, which constitutes 50 percent of processor’s total manufacturing costs, bought from U.S. supplier. Motor is assembled in U.S. factory. • Can seller make unqualified claim of "Made in USA"? • What do you need to find out first? • Where do the major components of the motor come from?

16. Example 5 • After years of working out of your Burlington apartment, you have invented and obtained a patent on a new product. The product is actually built in Malaysia. • Can you advertise the product as "created in USA"? • Consumers will reasonably interpret “created” to mean “made” • It is last substantially transformed outside the U.S.

17. Example 6 • You market a clock radio assembled in U.S. of U.S.-made components, except that plastic case was made from imported petroleum • Can you make a Made in USA claim? • The petroleum is far enough removed from the finished product, and is an insignificant part of it as well

18. Jordan v. Nissan North America and Jerry’s Nissan • “Reverse Buy American Case” • “Three Years Running…The #1 Import Minivan” • MFD. BY FORD MOTOR COM. U.S.A. FOR NISSAN MOTOR CO. LTD.

19. R.L. Polk categorizes Quest as “import” because it classifies Nissan as an “import brand” • R.L. Polk doesn’t determine whether specific car lines are “import” or “domestic”

20. Sticker required by American Automobile Labeling Act was apparently not on vehicle • Had it been there, would have reflected that majority of parts were U.S./Canadian origin, with 25% from Japan

21. Other origin issues • California’s “Made in USA” law • California’s wine labeling statute • Proposed “Claims of Vermont Origin” rule

22. California “Made in USA” law • Prohibits claim if • any article, unit or part (of product) • substantially made, manufactured, or produced outside of the United States • Recent cases • Leatherman Tool Group, Inc. • Kwikset Corp. • Kwikset case suggests claim cannot be made if screw or pin made outside US

23. California wine labeling law • Under federal law, wine bearing name of specific region must be 75% from grapes from that region • Federal law does not apply to brand names in use prior to 1986 • Even if no grapes from region • If label discloses true geographic source of grapes used

24. Calif. passed law prohibiting use of “Napa” on label unless 75% of grapes grown in Napa County • Bronco Wine Co. sued • California Supreme Court held states are free to supplement federal regulations with state regulation to prevent consumer deception relating to wine labeling

25. “Made in Vermont” • Green Mountain Gringo Salsa • Lake Champlain Chocolate • Cabot Cheese • Ben & Jerry’s, “Vermont’s Finest” • Vermont Teddy Bear Company