Made in USA Lawyer

Made in USA Lawyer

Made in USA lawyer Richard Newman of Hinch Newman LLP concentrates on ensuring product advertising, marketing, labeling, packaging and marking complies with FTC Made in USA regulations, which require "all or virtually all" significant parts, processing, and assembly to occur in the U.S..  Hinch Newman LLP is a leader in assisting businesses vet marketing, navigating supply chain sourcing and defending against FTC investigations and enforcement relating to deceptive Made in USA claims, Labeling Rule violations and violations of the FTC Act.

If a Made in USA investigation is lauched against your company by the Federal Trade Commission, Hinch Newman is able to guide clients in making compliant U.S. origin claims in order to avoid expensive enforcement actions. The firm possesses elite experience and authority in the area of Made in USA compliance and defense, from responding effectively to regulatory scrutiny and the implementation of remedial corrective action plans to achieving favorable outcomes in MUSA investigations that minimize business disruption to business operations.

  • Excellent Record of Resolving MUSA Matters Amicably
  • Strategic and Customized Response Plans
  • Made in USA Compliance Counseling and Training Programs
  • Persuasive Legal Briefing
  • Claim Verification and Substantiation
  • Component and Cost Analysis
  • Supply Chain Audits
  • "All or Virutally All" Standard Compliance

  • Enforcement and Litigation Trend Monitoring

  • Product Labeling and Advertising Review

  • Supplier Certifications

  • "Substantial Transformation" Analysis

  • U.S. Customs Decision Analysis

What Are Key Attributes of a Made in USA Lawyer?

"Made in USA" lawyers concentrate on ensuring that product labeling, advertising, marketing, packaging and marking complies with FTC regulations, including the FTC Made in USA Guidelines and the FTC Made in USA Labeling Rule (16 C.F.R. Part 323), which require in pertinent part that "all or virtually all" significant parts, processing, and assembly occur in the United States.

Key aspects of a Made in USA lawyer include:

  • Aggresively defending FTC Made in USA investigations and enforcement matters
  • Preventing deceptive MUSA advertising, marketing, labeling, packaging and marking
  • Evaluating whether express and implied U.S origin related representations meet the "all or virtually all" standard, including whehter the product has no - or neglible - foreign content
  • Assisting advertisres and manufacturers determine whether qualified and unqualified claims are truthful and can be substantiated
  • Ensuring the avoidance of misleading iImagery such as American flags and geographic maps
  • Designing and implementing remedial action plans designed to limit liability exposure and secure investigation closure

While the Federal Trade Commission is the primary federal regulator for most MUSA claims, state regulators, plaintiffs' Made in USA attorneys, state attorneys general, and the U.S. Department of Agriculture also police false or deceptive Made in USA representations.  Made in USA lawyer Richard Newman of Hinch Newman LLP knows how to win these matters, including FTC Made in USA matters. 

Companies that are interested in auditing their supply chains, updated product marketing and packaging, or that are facing scrutiny from the FTC, plaintiffs' consumer protection counsel or other regualtory agencies should contact an experienced Made in USA attorney.

What is the FTC Made in USA Labeling Rule?

In order to advertise or marketing a product with an unqualified Made in USA claim like “Made in USA,” “Manufactured in USA," or “Built in America” with no mention of imported content, a company must be capable of demonstrating that its product is “all or virtually all” made in the United States, all the way back to raw materials. 

The FTC Made in USA Labeling Rule became effective in August 2021.  The Labeling Rule makes it unlawful to label a product as Made in USA unless the product can satisfy the "all of virtually all" standard.  The FTC Made in USA Labeling Rule covers labels on products and photos or depictions of labels in online of other advertising.

The "all or virtually all" standard takes numerous factors into account and there is no one-size-fits-all rule.  Final assembly, significant processing and "all or virtually all" components must be of U.S. origin.  As a general rule, by FTC standards, any foreign costs must be minimial, any foreign parts must be de minimis and used early in the production process, and any foreign parts must not materially impact how the product functions or appears.

There is no specific percentage of foreign costs permitted undrer the "all or virtually all" standard. For example, even if foreign costs for a particular product are less than 5% an unqualified Made in USA claim may still be considered deceptive due to other factors considered by the FTC.

Advertisers and manufacturers that violate the Labeling Rule are potentially liable for monetary civil penalties and other monetary relief, such as consumer redress.  In many instances, civil monetary penalties are not available to the FTC for violations that occur in non-label advertising.

Making an unqualified claim is risky business unless the components are genuinely minimal.  Consult with a seasoned FTC Made in USA lawyer prior to disseminating marketing materials, packaging or labeling with express or implied U.S. origin claims, or if your company has received a Civil Investigative Demand or access letter related to Made in USA marketing or labeling.  Made in USA lawyer Richard Newman possesses notable knowledge and experience pertaining to evolving U.S. origin claim related case law, the basis for case closures and how to achieve them, how to achieve optimal investigation resolution, U.S. Customs decisions and FTC policy related to Made in USA matters. 

What is the Standard for Unqualified Made in USA Claims?

In order for a product to be called Made in USA, or claimed to be of domestic origin without any qualifications, the product must be “all or virtually all” made in the U.S.   

“All or virtually all” means that the final assembly or processing of the product occurs in the United States, all significant processing that goes into the product occurs in the United States, and all or virtually all ingredients or components of the product are made and sourced in the United States.  The product should contain no — or de minimis — foreign content.

When an advertiser or manufacturer disseminates an unqualified claim that a product is Made in USA, it must possess a “reasonable basis” to substantiate the claim.  This means that an advertiser or manufacturer must possess competent and reliable evidence prior to dissemination to back up the claim that the product is “all or virtually all” made in the U.S.

Addtionally, advertisers and manufacturers possess an ongoing obligation to ensure that representations that are disseminated remain truthful and non-misleading.  In the event that circumstances change and there no longer exists a "reasonble basis" to support unqualifed Made in USA claims - for example, components are sources overseas - the company must update its marketing materials.

What Factors do FTC Made in USA Attorneys Consider to Determine if a Product is "All or Virutally All" Made in the U.S.?

First, a product’s final assembly or processing must take place in the U.S.  Only then will FTC Made in USA lawyers consider other factors, such has how much of a product's total manufacturing costs can be assigned to U.S. parts and processing, how far removed any foreign content is from the finished product, and the importance of the foreign content to the product’s overall form or function.

Many advertisers and manufacturers make the mistake of assuming that costs tell the entire story.  They do not.  In fact, while a small portion of the total manufacturing costs may be attributable to foreign processing, that processing can represents a significant amount of the product’s overall processing.  The same can potentially be true for foreign parts or processing which, if more than negligible, would render an unqualified claim unlawful.

Example: A manufacturer produces watches at a plant in Nevada using mostly U.S. parts and labor. All watches include parts that enable the watch to keep time. The manufacturer uses inexpensive Swiss movements in its watches. While movements constitute a small percentag of the costs to make the watches, without the movements the watches cannot tell time. The movements are essential to the function of the watches. Consequently, an unqualified Made in USA claim would likely be consdered deceptive.

Example: A table lamp is assembled in the United States from U.S.-made brass, an American-made lampshade and an imported base. The imported base accounts for a small percent of the total cost of making the item. Here, an unqualified Made in USA claim would like be considered deceptive. For one, the base is not far removed in the manufacturing process from the finished product to be considered of little consequence. Second, the base is a significant part in the function of the final product. 

Advertisers and manufacturers must also be careful about not indicating, either expressly or implicitly, that an entire product line is of U.S. origin when, in fact, only some products in the line are of U.S. origin.

Products with final processing in the United States and intricate supply chains may have nuanced analyses and arguments.  However, it a product is imported a MUSA claim on a label or advertisement is begging for trouble.  The FTC oftentimes refers to import reports.

If an advertiser or manufacturer can demonstrate that "substantial transformation" occurred in the U.S., the product is not considered to be imported.  However, an unqualified Made in USA claim may still not be appropriate.

What Items Should be Included in Analyzing the Percentage of Domestic Content?

Importantly, advertisers and manufacturers shoud consult with a Made in USA lawyer to analyze the percentage of domestic content in a particular product.  As a general rule, the cost of goods sold or inventory costs of finished goods are releavant for use in the analysis.  According to the FTC, those costs are typically limited to the total cost of all manufacturing materials, direct manufacturing labor and manufacturing overhead.

Advertisers and manufacturers should not just assume that components sourced from U.S. suppliers is of U.S. origin. However, they may, in some instances, rely upon information from American suppliers about the amount of domestic content in components purchased for their final products. If supplier certification if provided appropriately and in good faith prior to making U.S. origin claims, reliance upon information from suppliers about the domestic content in components produced may not be unreasonable. However, advertisers and marketers should never assume component input is 100% of U.S. origin, despite a supplier being located in the United States.

Example: A company manufactures food processors in its U.S. plant, making most of the parts, including the housing and blade, from U.S. materials. The motor, which constitutes 50 percent of the food processor’s total manufacturing costs, is bought from a U.S. supplier. The food processor manufacturer knows the motor is assembled in a U.S. factory. Even though most of the parts of the food processor are of U.S. origin, the final assembly is in the U.S., and the motor is assembled in the U.S., the food processor is not considered “all or virtually all” American-made if the motor itself is made of imported parts that constitute a significant percentage of the appliance’s total manufacturing cost. Before claiming the product is Made in USA, this manufacturer should look to its motor supplier for more specific information about the motor’s origin.

Example: On its purchase order, a company states: “Our company requires suppliers to certify the percentage of U.S. content in products supplied to us. If you are unable or unwilling to make such certification, we will not buy from you.” Appearing under this statement is the sentence: “We certify that our ___ have at least ____ % U.S. content,” with space for the supplier to fill in the name of the product and its percentage of U.S. content. The company generally could rely on a certification like this to determine the appropriate country-of-origin designation for its product.

Are Raw Materials Relevant When Evaluating the Manufacturing Process?

How far back in the manufacuturing process should advertisers and manufacturers look when evaulating whether a product is "all or virutally all" made in the U.S.?  An experienced Made in USA law firm like Hinch Newman can assist advertisers and manufacturers to determine the applicable percentage of U.S. content by looking back far enough in the manufacturing process to be reasonably sure that any significant foreign content has been included in the assessment of foreign costs.  According to FTC Made in USA lawyers, foreign content incorporated early in the manufacturing process may be less significant to consumers than content that is a direct part of the finished product or the parts or components produced by the immediate supplier.

Example: Silicon used in a microchip within a computer is an early input into a computer’s manufacture and is likely to constitute a very small portion of the final product’s total cost. However, the wood in a less complex product like a wooden table is a direct and significant input. Whether the wood in a table is imported would likely be a significant factor in evaluating whether the finished product is “all or virtually all” made in the U.S.

What about raw materials?  Are they included in the evaluation of whether a product is “all or virtually all” made in the U.S.?  It depends upon how much of the product’s cost the raw materials make up and how far removed from the finished product they are.  

Example: If the gold in a gold bracelet is imported, an unqualified Made in USA claim for the bracelet would be considere deceptive. Why? Becuase of the significant value the gold is likely to represent relative to the finished product. Additionally, the gold would be considered an integral component of the bracelet and is merely one step back from the finished product. Contrast plastic in the plastic case of a clock radio otherwise made in the U.S. of U.S.-made components. Here, if plastic case was made from imported petroleum, a Made in USA claim may be appropriate because the petroleum is may be considered far enough removed from the finished product, and insignificant part of the clock radio, as well.

Consult a seasoned Made in USA lawyer to assess the appropriateness of an unqualified MUSA claim ot to remediate existing U.S. origin related advertising, marketing, packaging, labeling and marking.

What is a Qualified Made in USA Claim?

A qualified Made in USA claim describes the extent, amount or type of a product’s domestic content or processing. It indicates that the product isn’t entirely of domestic origin. Examples of qualified Made in USA claims include “60% U.S. content,” “Made in USA of U.S. and imported parts,” and “Couch assembled in USA from Italian Leather and Mexican Frame.”

A Made in USA lawyer can advise on when a Made in USA claim may be appropriate for products that include U.S. content or processing but fail to meet the "all or virtually all" criteria for making an unqualified Made in USA claim.

Advertisers and manufacturers should be aware that becuase qualified claims may imply more domestic content than was actually used to manufacture the product, caution must be exercised when making such claims.  Qualified claims should be avoided unless the product has a significant amount of U.S. content or U.S. processing.  Qualified Made in USA claims must be truthful and substantiated as must unqualified claims.

Example: A treadmill is assembled in the U.S. and that assembly constitutes a “substantial transformation.” All the major parts are imported. Some incidental parts are manufactured in the U.S. and  account for approximately three percent of the total cost of all the parts. Because the value of the U.S.-made parts is negligible compared to the value of all the parts, a claim on the treadmill that it’s “Made in USA of U.S. and Imported Parts” would like be considered deceptive. However, a claim like “Made in U.S. from Imported Parts” or “Assembled in U.S.A.” would likely not be considered deceptive.

Made in USA Lawyer for U.S. Origin Claims for Specific Parts or Processes

Representations about a particular manufacturing or other process being performed in the U.S. or that a particular part was manufactured in the U.S. must be truthful, substantiated and clearly refer to the specific process or part.  In order to avoid implying that more domestic content actually exits such claims must not refer to the general manufacture of the product.

General terms such as “produced,” “created” or “manufactured” in the U.S. are unlikely to convey a message limited to a particular process.  Consequently, additional qualification may be necessary to describe a product that is not “all or virtually all” made in the U.S.  Additionally, if a qualified claim references “U.S. parts,” the advertiser or manufacturer must be prepared to substantiate those parts are “all or virtually all” Made in USA.

Lastly, if a product is of foreign origin (i.e., substantially transformed abroad), advertisers and manufacturers should make ensure sure they satisfy U.S. Custom's marking legal regulations that require marking with a foreign country of origin.

Example: A company designs a product in Boston and sends the blueprint to a factory in Germany for manufacturing. THe product is labeled “Designed in USA — Made in Germany.” Such a specific processing claim would not lead a reasonable consumer to believe that the whole product was made in the U.S. However, CBP requires the product to be marked “Made in,” or “Product of” Finland becausee the product is of German origin and the claim refers to the U.S. Examples of other specific processing claims are: “Bound in U.S. Printed in England” and “Hand carved in U.S. Wood from China.” 

Example: A company advertises its product, which was invented in New York City and manufactured in Italy, as “Created in USA.” This claim would be considered deceptive because consumers are likely to interpret the term “Created” as Made in USA — an unqualified U.S. origin claim.

The Made in USA law firm of Hinch Newman LLP and Richard B. Newman regularly assists advertisers and manufacturers with making compliant MUSA-related claims that align with overall marketing requirements.

When Can I Make an "Assembled in USA" Claim?

A product that includes foreign components may be called “Assembled in USA” without qualification provided that its principal assembly takes place in the U.S. and the assembly is substantial.  In order for an “assembly” claim to be valid, the product’s last “substantial transformation” also should have occurred in the U.S.  

Example: A lawn mower, composed of all U.S. parts except for the cable sheathing, flywheel, wheel rims and air filter (15%-20% percent foreign content) is assembled in the United States. An “Assembled in USA” claim maybe appropriate.

Example: All the major components of a computer, including the motherboard and hard drive, are imported. However, the computer’s components are then are put together in a simple operation in America. As such, there is no substantially transformation. An “Assembled in U.S.” claim without further qualification would like be considered deceptive.

Does the NAD Rely Upon FTC Made in USA "All or Virtually All" Analysis?

Yes.  The National Advertising Division of BBB National Programs relies upon the FTC Made in U.S. "all or virutally all" standard.  The NAD, not unlike the FTC, takes an aggressive approach with respect to the level of substantiation advertisers and manufacturers must possess in order to support an unqualified Made in USA claim.
 
For example, unqualified Made in USA claims with only a few components of unknown origin that are de minimis by cost, may be determined to be sufficiently important to the function of a product to  preclude an unqualified claim.  Here, similar to FTC analysis, the NAD considers a number of actors in order to determine if a product is "all or virtually all" Made in the U.S., including but not limited to the percentage of costs attributable to imported materials, how far back in the manufacturing chain the imported content is, the source of raw materials, and the importance of the imported content to the form or function of the product.
 
Advertisers and marketers need to be careful with express and implied Made in USA representations.  Making an unqualified claim for a product that incorporates any foreign content at all - even if de minimis foreign content by cost - places advertisers and manufacturers at a high risk of a self-regulatory challenge.  Even more so if the foreign units impact how a product works or appears.  Contact a Made in USA lawyer to discuss how implementing qualified Made in USA claims may be an appropriate method to limit potential liability exposure, or if your company is the subject of FTC or NAD scrutiny.

What Are Strategies an Made in USA Attorney Implements When Facing an FTC MUSA Investigation?

Strategies utlized by a Made in USA lawyer when advertisers and manufactureres are the targets of an FTC investigation or other inquiry pertaining to MUSA related advertising, marketing, packaging, labeling or marking include, but are not limited, to the following:

  • Advocacy surrounding the Made in USA Labeling Rule, MUSA Guidelines FTC Enforcement Policy Statement on U.S. Origin Claims, and related commentary
  • Aggressively seeking investigation closure while considering the appropriateness of the "all or virtually all standard"
  • Analysis of costs of good sold and inventory costs
  • Advocacy surrounding supplier-related diligence, as well as the proporation of foreign and domesitc content, and related costs
  • Analysis of "substantial transformation" and whether there may exists an argument for "double substantial transformation"
  • Consideration of raw materials in the product and how early in the manufacturing process any foreign content was incorporated
  • Analysis of U.S. job creation and the scope U.S. manufacturing operations
  • Coordinate the implementation of a corrective action plan and related remedial measures
  • Advocacy related to why civil penalties are not warranted, including consideration of lack of knowledge fairly implied, the minial degree of culpability, the lack of prior conduct, inability to pay, impact on ability to continue to do business, and other matters as justice may require
  • Analysis of applicable affirmative defenses

Consult a Mads in USA lawyer with questions about how to comply with Made in USA legal regulatory requirements or if your company has received an inquiry from a regulatory agency or private plaintiff.

Please contact us at (212) 756-8777, via email to info@hinchnewman.com or via our Online Case Submission Form.    

Please contact us at (212) 756-8777, via email to info@hinchnewman.com or via our Online Case Submission Form.