Last month, the FTC closed an investigation into whether Jantec Sign Group overstated the extent to which its neon signs are made in the United States. According to the FTC, the signs incorporated significant imported components.
As it has in numerous other closing letters and enforcement decisions, the FTC reiterated that, in order to make an unqualified "Made in USA" claim, the product must be "all or virtually all" made in the United States. In order to determine whether a product qualifies, marketers must consider a number of factors, including the proportion of the product's total manufacturing costs attributable to U.S. parts and processing, how far removed any foreign content is from the finished product, and the importance of the foreign content or processing to the overall function of the product.
A recent case from the federal court in the District of New Jersey is an important reminder that a false or misleading "Made in the USA" claim may also result in a false advertising claim from a private plaintiff as well. In Fish Kiss v. North Star Creations, the parties fought about a variety of issues arising out of a license agreement. One of the claims brought by the plaintiff, though, alleged that the defendants violated the Lanham Act by labeling products as "Made in USA" even though the defendants' materials supplier imports its goods.
In order to state a claim under the Lanham Act, the court said that the plaintiff must demonstrate that: (a) the defendant made a false or misleading statement concerning its product; (b) the statement caused actual deception or at least created a tendency to deceive a substantial portion of the intended audience; (c) the deception likely influenced purchasing decisions by consumers; (d) the advertised goods traveled in interstate commerce; and (e) the statement created a likelihood of injury to the plaintiff. Here, the court held that the plaintiff sufficiently stated a claim -- based on the defendants' "Made in USA" advertising -- sufficient to survive a motion to dismiss.
So, if you're making "Made in the USA" claims, don't forget that it's not just the FTC that is looking at these claims. You could hear from a competitor or consumer as well.