Federal Trade Commission staff closed an investigation into Kansas City watchmaker Niall Luxury Goods on Nov. 20, 2015, after the company changed its “USA Made” claims to disclose that its watch movements were made in Switzerland.
Why the movement mattered
Unqualified “Made in USA” or “Built in USA” claims suggest a product is “all or virtually all” made in the USA, the FTC letter said. The agency weighs the share of manufacturing cost from U.S. parts and processing, how far removed foreign content is from the finished product, and how important the foreign content is to the product’s function.
The letter said that although a Swiss movement may cost little next to Niall’s U.S. manufacturing costs, “without a movement, a watch cannot tell time. Therefore, movements are essential to the function of a watch.”
What Niall changed
- It updated claims on watch dials and bezels to say the watches contain Swiss parts; WatchPro reported the casebacks and dials now read “USA Made Swiss MVMT.”
- It updated its websites and social media.
- It adopted compliance steps, including legal review of future marketing.
The FTC said closing the matter was not a finding that no violation occurred.
A signal to the industry
FTC attorney Julia Solomon Ensor told Marketplace and Hodinkee that the letter was meant as guidance for watch companies on U.S.-origin claims. In a Dec. 29, 2015, client alert, the law firm K&L Gates said the letter, together with a similar closing letter to the maker of the Spray Pal diaper sprayer, showed the FTC focusing on whether foreign parts are essential to a product’s function.
Source & credit
Sources: Federal Trade Commission: closing letter to counsel for Niall Luxury Goods, Nov. 20, 2015; Marketplace: “The slippery slope of ‘Made in USA’ claims”, Dec. 14, 2015; Hodinkee: FTC and American watchmaking report; WatchPro: “US Body Takes Issue With Niall USA Made Claims”; K&L Gates: “FTC Signals More Rigorous Enforcement on ‘Made in USA’ Labelling”, Dec. 29, 2015.