If your product or service is described as “American Made,” it tends to command higher prices due to public perceptions about increased quality and/or supporting domestic jobs. But what if a company lies about goods or services being “American Made”? What are the acceptable boundaries for calling out a business rival for allegedly telling falsehoods about its goods or services being “American Made”? A new court case is raising these important questions. In I Dig Texas v. Creager, first argued in the Northern District of Oklahoma federal court, the two companies (I Dig Texas and Creager Services, LLC) disputed whether or not Creager was lying about its products being made in the U.S.A.
Creager claimed that I Dig Texas broke the law by using Creager’s copyrighted photos in its negative ads that attacked Creager, allegedly violating the Copyright Act. The district court found in favor of I Dig Texas, declaring that Creager failed to prove that I Dig Texas had profited from its anti-Creager ads. However, undisputed evidence in the case reveals that I Dig Texas, despite having criticized its rival for falsifying “American Made” claims, also used products not entirely made in the United States. So, where does the law stand when it comes to companies feuding over “American Made” status?
The Lanham Act Standards Make it Difficult to Declare Fraud/Slander
The federal 10th Circuit Court of Appeals affirmed the district court’s ruling on the grounds that I Dig Texas’ claims were ambiguous and, thus, did not violate the Lanham Act. I Dig Texas did not violate Creager’s rights because, according to the 10th Circuit, there is no objective definition of “American Made.” In addition, there are other difficult standards to meet, including proving injury. Without exhaustive data, how can companies prove that other firms’ allegations of “American Made” falsifications materially harmed their revenue?
As more firms challenge each other regarding their use of domestically made goods, it is important for courts to agree on a standard. This is especially important because federal subsidies and tax credits for using American-made inputs are available.
Court Seems to Disagree With Federal Regulatory Agencies
While the 10th Circuit said that “American Made” was an ambiguous designation, this may contradict regulations created by the Federal Trade Commission (FTC). The FTC has created binding rules for using a “Made in the USA” designation, some more stringent depending on the industry. To use this designation and appeal to consumers, firms need to use “all or virtually all” American-made inputs. Unfortunately, “virtually all” also leaves some ambiguity. Is this 95 percent, 90 percent, or even 85 percent? Is it percent by weight, volume, or market value? The agency says that all major components must be made in the United States, though some producers might argue over whether a component is “major” or not.
With pending legislation using the FTC’s “Made in the USA” standard to determine eligibility for tax credits, it is important to hammer out details before companies apply for these credits! While some might see “Made in the USA” or “American Made” as generic terms, they can be a big deal when it comes to economic competition.
Image credit: I Dig Texas
