ARTICLE
12 April 2024

Can A Disclaimer Effectively Modify A "Made In USA" Claim?

FK
Frankfurt Kurnit Klein & Selz

Contributor

Frankfurt Kurnit provides high quality legal services to clients in many industries and disciplines worldwide. With leading practices in entertainment, advertising, IP, technology, litigation, corporate, estate planning, charitable organizations, professional responsibility and other areas — Frankfurt Kurnit helps clients face challenging legal issues and meet their goals with efficient solutions.
Stihl Incorporated USA promoted its outdoor power equipment as having been "Made in America." Almost all of advertising that included this claim...
United States Media, Telecoms, IT, Entertainment
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Stihl Incorporated USA promoted its outdoor power equipment as having been "Made in America." Almost all of advertising that included this claim also had a disclaimer which read, "A majority of STIHL products sold in America are made in America of U.S. and global materials." Did the disclaimer effectively qualify Stihl's "Made in America" claim? That was the issue in a recent case decided by the National Advertising Division.

Stihl's advertising was challenged by Milwaukee Electric Tool Corporation. The challenger argued that, even with the disclaimer, consumers are still taking away a message that all of the company's products are made in the United States. Interestingly, the challenger submitted a consumer perception study that it had commissioned which showed that more than 44% of respondents took away the message that Stihl's products were made here and more than 35% of respondents took away the message that the products' parts were made here as well.

The NAD held that that the disclaimer was not effective in qualifying Stihl's "Made in America" claim and recommended that the advertiser modify the advertising to cure the misleading messages that were conveyed. Here's why.

First, the NAD determined the challenger's survey evidence was reliable evidence that consumers were, in fact, misled by the advertising. The NAD noted that it generally only requires a showing that 15-20% of respondents take away a particular message. NAD wrote, "Here, 35.7% and 44.2% are well above that threshold and support a finding that consumers viewing either the print ad or the webpage and video will take away a message that all or virtually all of Stihls' products – and those products' parts – are made in the United States."

Then, the NAD said that it believed – independent of the survey evidence – that Stihl's ads were misleading. Pointing to the fact the advertising included prominent images of the U.S. flag, the NAD concluded that "the context of Stihl's ads conveyed a strong, unqualified 'Made in America' message." While the NAD acknowledged the presence of the disclaimer, it said that it didn't think that it was effective at qualifying Stihl's claims. The NAD explained, for example, that, "Although the Advertiser included a disclosure with its claims that remains onscreen for the duration of the commercial, the collage of images showing waving flags, equipment moving through factories, consumers using tools, and scenic locations across the U.S. distract attention from the small print disclosure, making the disclosure ineffective at qualifying the claims."

There's a lot of attention being paid right now to U.S.-origin claims. Enforcement of the Federal Trade Commission's Enforcement Policy Statement on U.S. Origin Claims and its (relatively new) Made in USA Labeling Rule is one of the FTC's top priorities. The focus has largely been on whether advertisers are satisfying the FTC's "all or virtually all" standard.

This NAD decision, however, highlights the risks associated with making qualified U.S.-origin claims. If you're going to make a qualified claim – as Stihl attempted to do here – it's almost always going to be better if you modify the claim itself, rather than relying on a disclaimer to explain what you mean. As this case shows, there's no guarantee that the disclaimer will be considered to be effective.

Stihl Incorporated USA, NAD Case No. 7267 (02/08/2024).

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