A Different Take on "Made in USA" Claims From the 10th Circuit?

Can you promote your product as being “Made in the USA” if the product is assembled in the United States using some foreign components?  

Federal Trade Commission standards for making a U.S.-origin claim are well-established.  If you're going to claim that a product is made here, you must substantiate that the product is “all or virtually” all made in the United States.  This means, essentially, that all significant parts and processing that go into the product must be of U.S. origin and that the final assembly or processing of the product takes place here as well.  (You can find these standards in the FTC's Enforcement Policy Statement on U.S. Origin Claims and in its Made in USA Labeling Rule.)

A recent case in the 10th Circuit took a different approach, however, when evaluating a company's “Made in USA” claims.  The lawsuit involved competing distributors of a type of construction equipment called “skid steer attachments.”  One company, I Dig Texas, sells “Texas Post Drivers” and one of its competitors, Creager Services, sells “Montana Post Drivers.”  

I Dig Texas promoted its products by claiming that they were American-made and that Creager's products were made in China.  Creager sued, alleging false advertising under the Lanham Act (among other things).  Creager argued that I Dig Texas's U.S.-origin claims were literally false, since some of the Texas Post Driver components were sourced from outside of the United States. 

While the resolution of this dispute would have been pretty easy applying FTC standards, the 10th Circuit didn't think that an American-made claim necessarily communicates that a product and all of its components were, in fact, made here.  Framing the question as, “what does it mean to make a product in the United States or in America,” the court answered by saying, “the term make could refer either to the origin of the components or to the assembly of the product itself.  For example, if Chrysler says that its cars are American-made, someone might regard the statement as truthful if Chrysler assembles the cars in the United States even if some components came from overseas.”  Accordingly, the court held that the claim – for purposes of the Lanham Act – was not literally false.  (Since Creager didn't argue, alternatively, that if the claim wasn't literally false, it was still likely to mislead consumers, the court didn't take up that issue.) 

Interestingly, the court also looked at whether I Dig Texas's use of patriotic symbols (such as the American flag) falsely communicated that its products had been made in the United States.  The court wrote, “Granted, patriotic symbols could imply that the products were American-made.  But the symbols couldn't objectively be verified as true or false.  As a result, the use of American symbols was ambiguous and couldn't renter the advertisements literally false.”  (The FTC, on the other hand, says that, “Depending on the context, U.S. symbols or geographic references, such as U.S. flags . . . may, by themselves or  in conjunction with other phrases or images, convey a claim of U.S. origin.”)

I Dig Texax v. Creager, 2024 WL 1590590 (10th Cir. 2024).