Fish & Richardson continues to follow all FCC enforcement actions taken against RF equipment manufacturers, vendors and users concerning violations of the FCC's marketing rules and technical standards. These include enforcement of Rule Parts 2, 15, 18, 22, 24, 27, 90, and 95, as well as the tracking of voluntary consent decrees, citations, and Notices of Apparent Liability and Forfeiture. In addition to simply punishing those who violate the rules, the FCC has sought out certain types of violations in an attempt to further policy. For instance, in furtherance of smoothing the 2009 transition to DTV, the FCC has recently assessed forfeitures exceeding $10 million against manufacturers, importers, and retailers of televisions that do not conform to the new DTV rules. It should also be noted that the FCC recently made an inflation adjustment to its forfeiture rules to increase the amount of penalties it may impose on equipment manufacturers by nearly 45 percent. The FCC may now impose forfeitures of up to $16,000 for each violation or each day of a continuing violation, up to a total of $112,500 for a single act.
The Enforcement Bureau also recently began an "Enforcement Advisory" program whereby the Bureau will periodically release advisories "designed to educate businesses about and alert consumers to what's required by FCC rules, the purpose of those rules and why they're important to consumers, as well as the consequences of failures to comply." P. Michele Ellison, Chief of the Enforcement Bureau, stated that the Bureau "hope[s] that these Advisories will become a familiar tool for industry and their counsel as they conduct periodic compliance reviews and increase their internal, self-policing efforts." The Enforcement Advisory publications can be viewed here.
To view a matrix of FCC enforcement activities since 2006, please click here.
Trends in FCC Enforcement – Equipment Manufacturer Violations 2006-2012
I. Enforcement in a Nutshell
Whereas in the past the FCC would have addressed a minor marketing violation with a brief letter requesting information and asking for the violation to cease, today the process has become more formal and the costs of non-compliance have skyrocketed. Initial contact from the FCC for a rule infraction will be in one of the following forms:
- Citation - essentially an allegation that a device manufacturer has violated the rules. It is generally sent to one that is not a manufacturer or responsible party for a first-time violation. For instance, citations are often sent to the operators of non-compliant unlicensed devices. A recipient is given an opportunity to reply, and a repeat violation can lead to imposition of a forfeiture.
- Letter of Inquiry - usually follows a formal or informal complaint that can be filed by anyone (spectrum user, competitor, etc.) and is held in confidence by the FCC. The LOI will be directed to the manufacturer (or responsible party) or dealer and will request detailed information about the device in question, the compliance testing, the marketing history and the rules that apply. Often the FCC will request copies of supporting documents in the manufacturer's or dealer's possession and pose questions that have to be answered by knowledgeable individuals. An LOI should be viewed as an invitation for self-incrimination, and once it is received, the recipient becomes deeply enmeshed in the enforcement process. Answers must be complete and truthful, supported by sworn statements from company officials, and there is a continuing obligation to provide information in the future.
- Notice of Apparent Liability - can be sent before or after an LOI. An NAL states that a manufacturer or dealer has violated an FCC rule and is liable for a monetary forfeiture of a specified amount. The recipient of an NAL has an opportunity to seek a dismissal and/or reduction in the amount of the forfeiture.
How it ends:
- Forfeiture Order - follows an NAL or a citation. This is a formal order from the FCC that a monetary forfeiture in a specific amount has been assessed against the manufacturer, along with an explanation of how the FCC arrived at the amount.
- Consent Decree - a settlement of an enforcement proceeding whereby the recipient of a citation/LOI/NAL and the FCC enter into a comprehensive agreement with no finding of wrongdoing. The recipient usually agrees to make a "voluntary monetary contribution" to the US Treasury and agrees to implement various corrective measures, including a compliance program to assure the FCC that similar violations will not reoccur.
- Criminal Prosecution - in rare cases, when there is evidence of intentional and repeated rule violations or false declarations under oath, the FCC will send an enforcement matter to the Department of Justice for criminal prosecution.
As the NALs, forfeiture orders, and consent decrees indicate, many of the Enforcement Bureau's activities are based on complaints filed by competitors and other spectrum users. Complaints can be formal or informal and are held in confidence beyond the reach of the Freedom of Information Act. Because the FCC has limited resources available to conduct its own equipment sampling and testing, it increasingly relies on data supplied by others.
II. Recent Trends in Enforcement
Our FCC enforcement matrix makes it easy to spot certain trends that should give manufacturers and test labs an idea of the types of enforcement activities the FCC staff has been pursuing. For instance:
- Minor rule violations will now result in forfeitures. A Class I permissive change that exceeded the FCC limits by only 1.4 decibels resulted in a $4,000 settlement with the device manufacturer. The $10 million in DTV forfeitures is based on labeling violations.
- Large forfeitures are becoming the norm. In 2007 an importer of electronic music devices was assessed a forfeiture of $1 million. That same year, a single importer of television sets without V-chips was assessed a forfeiture of more than $7 million.
- Each shipment can be a separate rule violation. The $10 million in DTV forfeitures was assessed against manufacturers, importers, and retailers based on each individual shipment being considered a separate rule violation.
- Confessing to an error will get you nowhere. In 2007, a manufacturer requested and received a Part 15 waiver to avoid a minor rule violation. The FCC assessed a $25,000 forfeiture for past violations, even though no complaint had ever been filed.
The bottom line is that manufacturers, importers, and test labs need to be more careful about FCC compliance. Before any product marketing begins, they have to think about the risks of enforcement and potential liability. Comprehensive FCC compliance programs should be developed and implemented in advance of sales, with extra scrutiny given to devices and components coming from offshore locations. Finally, regular post-market sampling of equipment should be the norm, with extra attention given to heretofore minor labeling requirements and pre-sale activities.