A little over 30 years ago, Bruce Springsteen unleashed “Born in the USA”–the rock anthem about disaffected Vietnam veterans struggling as they returned home. Today, clothing manufacturers and their resellers riffing on that “U.S.A. theme” have unleashed something quite different: class action lawsuits spurred by allegedly-disaffected consumers. Citizens of Humanity, True Religion, Macy’s, and others have all recently faced claims that their denim products were mislabeled as “Made in the U.S.A.” when they, allegedly, were not. With holiday shopping in full bloom, it is timely to discuss when a consumable product—like a pair of jeans—can be promoted as being “Made in the U.S.A.”
Manufacturers and resellers should bear in mind that there is no “one-size-fits-all” answer here because it depends on what body of law is considered. Under the Lanham Act, for example, a federal court in Minnesota recently found that the phrase “Made in the U.S.A.” could not support a literal falsity claim because that phrase does not have a “universal and definitive meaning.” And, because the court found insufficient evidence of actual deception (in the form of market research), the implied falsity claim likewise failed. The Court’s analysis certainly suggests that if a “Made in the U.S.A.” claim is pursued as a violation of the Lanham Act, a plaintiff should be prepared to show that the relevant consuming public is being deceived by that patriotic flourish.
By contrast, under the FTC’s Enforcement Policy Statement on U.S. Origin Claims, “all or virtually all” of the product must have been made in America before a product can be advertised as “Made in the U.S.A.” Although there is no bright line rule or percentage that deems products “all or virtually all” made in the United States, if foreign-made component parts comprise a “negligible portion of the product’s total manufacturing costs and are insignificant parts of the final product,” then the item will be considered to have been made in the United States. Even a phrase like “American Quality” can be considered a U.S. Origin Claim if accompanied by the U.S. flag and other indicia that would lead consumers to believe the product was made in America. And, “qualified” U.S. Origin Claims (such as “Made in the U.S.A. of Imported Parts”) have other rules that manufacturers need to consider as well.
California’s “Made in the U.S.A.” law is even more stringent. The California Court of Appeals in Benson v. Kwikset held that under Cal. Civ. Code Section 17533.7, if the merchandise consists of separate, identifiable components “any article, unit, or part” must be “entirely or substantially made, manufactured, or produced” in the U.S.A. Lamenting the court’s broad interpretation, the dissenting judge in that case observed that the U.S.S. Ronald Reagan could not contain the “Made in the U.S.A.” designation unless it “contained absolutely 100 percent American parts, down to the last screw.” As a nod to the dissent, one might think of the broad rule in Benson as being the “Gipper Guideline” for Made in the U.S.A. advertising claims under California law. (For those that came of age after the Cold War, President Reagan’s nickname was “The Gipper”—but that’s for another day).
So, with these various “American made” standards out there, what are clothing manufacturers to do? That takes us back to my opening motif regarding “The Boss.” Manufacturers should think of Bruce and ask this question: “Was this product Born in the U.S.A?” In other words, did all of the constituent parts of this product and its manufacturing come into being here? If so, then you’ve probably met the “Gipper Guideline” and you’ve got yourself a genuine American product under both the FTC and California standards. If not, then you might find yourself in “a little hometown jam” by using the Made in the U.S.A. moniker.