Overview
"Made in USA" claims are highly scrutinized. One need look no further than the Federal Trade Commission's (FTC) $3.17 million settlement with Williams Sonoma just two weeks ago. Private litigation challenging domestic origin claims is also on the rise, across a range of industries. Last month, however, the Tenth Circuit issued a decision in I Dig Texas LLC v. Kerry Creager, 98 F.4th 998 (10th Cir. 2024), which analyzed "Made in America" claims in a manner that diverged from the FTC's "Made in USA" guidance. While businesses are advised to use clear, unambiguous, and substantiated advertising claims to minimize potential legal issues, in this case, the ambiguity of a domestic origin claim actually worked in one litigant's favor by helping it avoid a finding of literal falsity under the Lanham Act.
A Finding of Ambiguity
The plaintiff-counterclaimant, I Dig Texas LLC, a construction equipment supplier, sued defendant-counterclaimant Kerry Creager, a competing manufacturer of skid steer attachments, alleging violation of the Lanham Act and various state consumer protection statutes based on the theory that I Dig falsely misrepresented its products as "Made in America."
The central question before the Court was whether a product can be represented as being "Made in America" if some versions of the product were assembled in China with Chinese and Canadian parts. Affirming the decision of the district court, the Tenth Circuit unanimously held that the term "made" was too ambiguous to be false as it "could refer either to the origin of the components or to the assembly of the product itself." Further, the panel found that a statement on I Dig's website—"We Provide 100% American Made Skid Steer Attachments"—was similarly ambiguous; and I Dig's use of patriotic symbols, while they bore an implication, likewise could not objectively be verified as true or false.
Notably, the appellate court rejected the plaintiff's invocation of the FTC's "Made in USA" guidance, finding that:
Even if the FTC policy were otherwise instructive, it would not bind us when addressing false advertising under the Lanham Act. And even if we were to consider the FTC policy, it acknowledges the absence of a "single 'bright line' to establish when a product is or is not . . . made in the United States." Given the absence of a "bright line," the FTC considers multiple factors, including the place of the final assembly and the nature of any foreign components. So the FTC policy doesn't remove the ambiguity of the phrase made in the United States or American-made.
(Emphasis in original.)
Key Takeaways
The I Dig decision highlights a somewhat counterintuitive result in the application of the Lanham Act to false advertising claims: by using language that could be interpreted in multiple ways, I Dig Texas avoided a finding of literal falsity—and false advertising—under the Lanham Act. Still, it remains to be seen if other courts will follow the logic of the Tenth Circuit regarding ambiguity in "Made in USA" claims. If you have questions about your domestic origin advertising and marketing claims, Steptoe's Advertising Law attorneys are here to assist.
