We ordinarily think advertising claims should be judged by how consumers perceive them and not what politicians think they should mean, but a recent bill passed in California threatens to do just that and sow even more confusion into the use of “Made in ____” claims.
Manufacturing products in the United States is suddenly a trendy topic, though as we often remind our clients and readers, the term “Made in USA” is a highly regulated claim. The FTC requires that companies only use the term when “all or virtually all” of the manufacturing costs are domestic. While the FTC permits qualified claims, such as assembled in the USA, it also recently issued a closing letter in a case where a company was improperly making such a claim for products that were imported into the U.S. in a “partially finished state.” And the NAD has even gotten into the act, finding recently that a claim of “built in the USA” was not the same as a claim of “Assembled in the USA,” but rather more akin to “Made in USA.” And while the Company had used a disclaimer that stated their products were built in America of domestic and foreign components the NAD said that the disclaimer was too small and suggested it be in larger type and more closely placed to the main domestic origin claim.
California, however, makes the FTC and NAD look like pussycats when it comes to restricting use of the “Made in USA” claim. California law states that it is misleading to use that phrase when the article or any unit or part thereof has been entirely or substantially made, manufactured or produced outside the United States. As a dissenting judge pointed out in a case interpreting the law, read literally the law would prohibit you from claiming that an aircraft carrier was Made in USA if only a single television monitor came from Taiwan.
Now California threatens to muddy these waters even further and create yet a third definition for what it means to claim that a product is “made” in a particular geographic location. In an effort, presumably, to prop up California based factories, the California legislature recently passed a “Made in California” act which creates a “Made in California” Program and Office which can permit companies to use a “Made in California” seal. To qualify for that seal, a company must first meet the California definition of “Made in USA” but then must further show that 51% of a product’s final wholesale value (by manufacture, assembly, fabrication or production) was added in California.
It will be interesting to see how this new law is implemented and whether it causes California to conform its Made in USA standard to the FTC’s. If not, the goals of the new “Made in California” program may go largely unmet as few companies may be able, or willing, to certify that the meet the program criteria, particularly that they satisfy California’s Made in USA requirements.
In the meantime, there are now at least three conflicting definitions for “Made in [insert favorite geographic location].” Two definitions rely upon the percentage of manufacturing cost that is domestic but use different standards of 51% and “all or virtually all.” The third looks at the parts rather than the sum of the whole and requires that each part be produced domestically. The likely result is consumer confusion and a trap for the unwary advertiser.