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Made in the USA

• Representations of Origin

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History

• 1980s 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 werent necessarily made here
  any longer

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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

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• 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

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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

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• 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.

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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

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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.

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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?)

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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

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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"

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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

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Example 2

• Company produces propane barbecue grills at plant
  in Nevada. Products 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

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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

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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 processors 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?

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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.

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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

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Jordan v. Nissan North America and Jerrys
Nissan

• Reverse Buy American Case
• Three Years RunningThe 1 Import Minivan
• MFD. BY FORD MOTOR COM. U.S.A. FOR NISSAN MOTOR
  CO. LTD.

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• R.L. Polk categorizes Quest as import because
  it classifies Nissan as an import brand
• R.L. Polk doesnt determine whether specific car
  lines are import or domestic

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• 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

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Other origin issues

• Californias Made in USA law
• Californias wine labeling statute
• Proposed Claims of Vermont Origin rule

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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

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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

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• 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

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Made in Vermont

• Green Mountain Gringo Salsa
• Lake Champlain Chocolate
• Cabot Cheese
• Ben Jerrys, Vermonts Finest
• Vermont Teddy Bear Company