The Federal Trade Commission recently closed an investigation into whether the J-B Weld Company's marketing materials may have overstated the extent to which its adhesive products are made in the United States. The FTC initiated its investigation following a referral from the National Advertising Review Board, after J-B Weld declined to follow the NARB's recommendations in an advertising challenge brought by Illinois Tool Works. (We previously reported on a lawsuit against J-B Weld raising similar issues.)
Although J-B Weld makes many products in the United States, in its closing letter, the FTC expressed concerns with the company's general "made in USA" claims because some of the company's products either incorporate significant imported content or are wholly imported. The FTC said, "it is appropriate for J-B Weld to promote the fact that it employs workers and makes a wide range of products in the United States, provided that marketing materials do not convey that all J-B Weld products are made in the United States or overstate the U.S. content of products that contain significant imported inputs."
In order to made an unqualified "made in USA" claim about a product, the FTC's Enforcement Policy Statement on U.S. Origin Claims requires that the product be "all or virtually all" made in the United States. The Enforcement Policy Statement also says that a marketer can say that a product is "made in the USA" even if it has a de minimis or negligible amount of foreign content.
But what about product packaging? One of the most interesting aspects of the FTC's closing letter was that the FTC said that, as a general matter, the "made in USA" analysis only applies to the product itself, and not the packaging that the product comes in. Disagreeing with the NARB's analysis, the FTC wrote, "the FTC has not required manufacturers to account for the origin of incidental, discarded packaging when analyzing product origin, unless the marketer's claims expressly or impliedly convey that the packaging is of U.S. origin." Here, the FTC said that it wasn't problematic to make "made in USA" claims on J-B Weld's products, even though the packaging wasn't made in the United States, since the packaging had "no independent value to consumers" and was "typically discarded upon depletion."
This alert provides general coverage of its subject area. We provide it with the understanding that Frankfurt Kurnit Klein & Selz is not engaged herein in rendering legal advice, and shall not be liable for any damages resulting from any error, inaccuracy, or omission. Our attorneys practice law only in jurisdictions in which they are properly authorized to do so. We do not seek to represent clients in other jurisdictions.