USA! USA! USA!

When members of Team USA walked into the 2016 Olympic Opening Ceremony wearing uniforms embroidered with the letters “USA,” the uniforms did more than just designate the team members’ identity as representatives of the USA. The uniforms also conveyed a claim about the uniforms’ degree of U.S.-made content: that they are all or virtually all made in the USA. In fact, Ralph Lauren, who designed the uniforms, confirmed this claim, stating in an interview with USA Today that all parts of the uniform were made in the USA.

Unlike textiles (and other products, like automobiles, wool, and fur products), which are governed by federal labeling statutes, there are no requirements to disclose the degree or amount of American-sourced content or manufacture in most other types of products sold in the U.S. But if a company does choose to make claims about the U.S. content of a product—either expressly, like “Made in the USA” or with reference to U.S. locations of headquarters or factories, or impliedly through imagery of the U.S. flag or outlines of U.S. maps—then those claims must comply with the Federal Trade Commission’s (“FTC”) labeling guidelines.

When is it OK to make an express or implied claim of a product’s U.S. content?

Under the FTC’s guidelines, products that are expressly or impliedly labeled or advertised as “Made in the USA” must be “all or virtually all” made in the U.S. (which includes the 50 states, the District of Columbia, and U.S. territories and possessions), meaning that all significant parts and processing of the product must be of U.S. origin, with no—or negligible—foreign content. Additionally, if foreign-sourced components are “essential” to the “overall function” of the product, it may be unlawfully misleading to label or advertise the product as “Made in the USA.” Other factors that may affect the validity of a claim that a product is “all or virtually all” made in the U.S. include how much of the product’s total manufacturing costs can be assigned to U.S. parts and processing, and how far removed any foreign content is from the finished product. If there is a reasonable basis—i.e., competent and reliable evidence—to support the claim that a product is “all or virtually all” made in the U.S.A., using the phrase “Made in the U.S.A.” and the image of the U.S. flag/outlines of U.S. maps alone, or in conjunction with each other, should satisfy the FTC’s guidelines.

With respect to an implied claim (e.g., using an image of the U.S. flag), consideration should also be given to copyright and trademark issues, in addition to the FTC guidelines. Specifically, if the image of the U.S. flag proposed for use was created by a third party, permission to use the image should be obtained from that third party, unless the copyright in the image has expired and the image is considered to be in the public domain. Furthermore, it is important to keep in mind that using the image of a U.S. flag with goods cannot establish trademark rights in the image. This is because U.S. trademark law prohibits registration of a mark consisting solely of or incorporating the flag of the United States, 15 U.S.C. 1052, subject to limited exceptions (e.g., a mark of individual or distorted features that are merely suggestive of a flag). See Knorr-Nahrmittel A.G. v. Havland Int’l, Inc., 206 USPQ 827, 833 (TTAB 1980). Such limited exceptions include, for example, a U.S. flag that is not in the normal flag shape and forms another design, number or letter, or when significant features of the U.S. flag are changed in shape of color. For more examples, see here.

If “Made in the USA” can’t be used, are there any other US-related claims that may be used?

The FTC’s guidelines does allow for some more flexible claims than “Made in the USA.” The claim “Assembled in the USA” can be made when a product includes foreign components and its principal assembly takes place in the US, if such assembly is “substantial”—meaning that the product’s “last substantial transformation” should have occurred in the U.S. For example, an “Assembled in USA” claim is appropriate for a lawn mower that is composed of all domestic parts except for the cable sheathing, flywheel, wheel rims, and air filter—approximately 15-20% foreign content – and assembled in the US. By contrast, an “Assembled in USA” claim may not be made for a computer for which all of the major components are imported and the components put together in a simple “screwdriver” operation in the U.S.

A “qualified” claim describes the extent, amount or type of a product’s domestic content or processing, and indicates that the product isn’t entirely of domestic origin – such as “60% U.S. content” or “Made in USA of U.S. and imported parts.” Of course, these claims must be accurate and not misleading to consumers.

Although it can be tempting to ride the tide of USA pride, and promote claims about the U.S. content of products, businesses should carefully evaluate whether those claims comply with the FTC guidelines.

This article appeared in the August 2016 issue of MarkIt to Market. To view our past issues, as well as other firm newsletters, please click here.