NAD Drills Down on Made in USA Claims



A new NAD decision clarifies the line between qualified and unqualified Made in USA claims. The domestic origins insights are largely wrenched from power tool cases, as is this action involving Stihl. Video ads for the tool company say, “Just three words tell you everything you need to know. They tell you why we employ more than 2,000 workers at our factory in Virginia Beach. Not everyone can say that. But we can. Made in America. Real steel. Find yours . . . Stihl.” The end frame has a disclaimer: “A majority of products sold in America are made of U.S. and foreign materials.” There are lots of waving flags and heartland imagery throughout as well. The NAD found, with help from a consumer survey, that the takeaway was an unqualified Made in USA rather than the narrower claim both that (1) not all of Stihl’s products were assembled in Virginia Beach and (2) even those that were had some foreign components.

The basic standard for a domestic origin claim is a tough one. It is all or virtually all of a product is manufactured in the U.S. including its component parts. And foreign components must be incidental. This has long been the FTC’s policy and is also part of a Rule for labeling claims that can result in serious penalties for violations. The NAD has faithfully enforced this standard in its cases.

The FTC has allowed qualified claims of Assembled in America if significant manufacturing takes place in the U.S. such that the good is “substantially transformed” here (a term and idea borrowed from U.S. Customs and Border Protection when determining how imported goods should be labeled). The FTC has also said that “Made in USA of foreign and domestic parts” conveys this “assembled but not made in the USA idea.”

Query: Would the NAD have come to the same decision without the survey? This may have been a run-of-the-(saw)mill case about whether a disclaimer was clear and conspicuous if only the video ad was at issue. But Stihl has more detailed copy on its website with far more explanation that the challenger also tested, and that was found to convey a broader message. The website led with “A majority of STIHL products sold in America are made in America of U.S. and global materials,” and repeated this in the first paragraph of the copy. We don’t get to see the surveys that are submitted to the NAD but only get a summary of them. We know the NAD credited this survey as being reliable, which the NAD often does not do. Without these additional details, it is hard to know what if any disclaimers or placement of disclaimers would have gotten the message across that not every single part of every single tool was American made. There is a policy issue here, of course, that investing in domestic manufacturing is a good thing and should be recognized and something a company can tout. This case serves as a good reminder that some copy testing on more complicated nuanced claims, such as qualified Made in USA claims, may be the best DIY solution to building a solid foundation of understanding how your customers understand your claims.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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