Claims about the U.S. origin of a product can be powerful marketing tools, particularly in today’s economy where increasing emphasis has been placed on “buying American” to help create U.S.-based jobs and stimulate U.S. economic growth. “Made in USA” is a typical U.S. origin claim used by advertisers to highlight a product’s domestic origin. A U.S. origin claim, however, can be conveyed in many different ways, including through the use of U.S. symbols, geographic references or any other symbol or statement that suggests a connection between the product and domestic origin.
For unqualified U.S. origin claims, the Federal Trade Commission (FTC) has long held that the product must be “all or virtually all made in the United States.” While this standard appears to be straightforward, in practice, determining whether a product meets this standard involves evaluating a number of factors related to a product’s creation. Advertisers also should be aware that some states, such as California, have imposed standards that are more stringent than the FTC’s standard for these types of claims, making a U.S. origin claim vulnerable to challenge by consumers and competitors in these states.
To meet the FTC’s standard, a product also must have undergone its last “substantial transformation” in the U.S. “Substantial transformation” is a term used by the U.S. Customs and Border Protection (CBP) to determine a product’s country of origin and is defined as a “manufacturing process that results in a new and different product with a new name, character, and use that is different from that which existed before the change.” Like the rest of the determination regarding U.S. origin claims, whether a product has been last substantially transformed in the United States is a very fact-specific determination, but the processing should have been substantial enough to significantly transform a product. Final screwdriver-type assembly, such as assembling previously manufactured major components of a product, is generally not enough to be considered a substantial transformation.