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Before the
Federal Communications Commission
Washington, D.C. 20554
In the Matter of )
) File No. EB-03-SE-291
Schumacher Electric ) NAL/Acct. No. 200432100010
Corporation, ) FRN # 0010291185
Mt. Prospect, Illinois
NOTICE OF APPARENT LIABILITY FOR FORFEITURE
Adopted: April 8, 2004 Released: April 12,
2004
By the Chief, Enforcement Bureau:
I. INTRODUCTION
1. In this Notice of Apparent Liability for
Forfeiture (``NAL''), we find Schumacher Electric
Corporation (``Schumacher'') apparently liable for a
forfeiture in the amount of seven thousand dollars ($7,000)
for marketing unauthorized equipment in willful and repeated
violation of Section 302(b) of the Communications Act of
1934, as amended (``Act''),1 and Section 2.803(a) of the
Commission's Rules (``Rules'').2
II. BACKGROUND
2. On November 5, 2003, the Enforcement Bureau
(``Bureau'') received a complaint alleging that Schumacher
was marketing a new line of SpeedCharge automobile battery
chargers (``SpeedChargers'') at the ongoing Automobile
Aftermarket Products Expo (``AAPEX'') in Las Vegas, Nevada.3
According to the complaint, Schumacher did not label the
exhibited SpeedChargers under Section 15.19(a)(3) of the
Rules,4 and did not display the trade show notice under
Section 2.803(c) of the Rules. The complaint was supported
by a sworn declaration of an individual who attended AAPEX.
In the declaration, the individual states that he visited
Schumacher's AAPEX booth, that he observed a notice that
categorized the Speedchargers as ``FCC Class B Compliant,''
that he noted that the SpeedChargers were not labeled as
verified, that he was given ``product catalogue tear
sheets'' describing the SpeedChargers (copies of which he
attached), and that Schumacher's Sales Manager told him that
all displayed units were ``final production units,'' were
``for sale,'' and were ready to ship or would be ready to
ship within two weeks.
3. On November 14, 2003, in response to the
complaint, the Bureau issued a letter of inquiry (``LOI'')
to Schumacher.5 On December 4, 2003, Schumacher responded
to the LOI.6 In its response, Schumacher stated that it
exhibited ``mock-ups'' (i.e., non-working display units) of
SpeedCharger models SC 600A, SSC 1000A, SC 1200A, SSC 1500A,
SC 2500A, SC 4000A, SC 6000A and SC 10000A.7 Schumacher
further represented that it did not sell and/or take orders
to sell any of the exhibited SpeedChargers at AAPEX.8
4. Of the exhibited models, Schumacher admitted that
SpeedChargers SC 2500A, SC 4000A and SC 10000A had not been
verified in accordance with the equipment authorization
procedures prior to AAPEX.9 Schumacher further admitted
that it did not display the trade show notice in its booth,
or in the promotional materials it distributed, at AAPEX as
required under Section 2.803(c). Schumacher explained that
it did not believe such notice was required, because the
models were mock-ups and not actual working units.10
Schumacher stated that in the future, it will implement ``a
policy of using the notice set forth in Section 2.803(c) for
any units for which verification testing has not been
completed prior to public display and for any promotional
materials depicting such units even though the materials do
not constitute an advertisement offering the sale or lease
of the units.''11
5. With respect to SpeedCharger models SC 600A, SSC
1000A, SC 1200A, SSC 1500A, and SC 6000A, Schumacher
represented, and provided supporting documentation
confirming, that the actual working devices had been
verified as compliant with Commission technical emission
standards prior to AAPEX.12 Schumacher explained that the
models exhibited at AAPEX were not labeled because they were
only non-working mock-ups, but that the requisite labels
under Section 15.19(a)(3) were properly affixed to the
models' actual working units.13
III. DISCUSSION
6. Section 302(b) of the Act provides that ``[n]o
person shall manufacture, import, sell, offer for sale, or
ship devices or home electronic equipment and systems, or
use devices, which fail to comply with regulations
promulgated pursuant to this section.'' Section 2.803(a)(2)
of the Commission's implementing regulations provides that:
Except as provided elsewhere in this section, no
person shall sell or lease, or offer for sale or
lease (including advertising for sale or lease),
or import, ship, or distribute for the purpose of
selling or leasing or offering for sale or lease,
any radio frequency device unless ... [i]n the
case of a device that is not required to have a
grant of equipment authorization issued by the
Commission, but which must comply with the
specified technical standards prior to use, such
device also complies with all applicable
administrative (including verification of the
equipment or authorization under a Declaration of
Conformity, where required), technical, labeling
and identification requirements specified in this
chapter [emphasis added].
As discussed below, the SpeedChargers are Class B digital
devices that employ switching power supply assemblies, and
as such are subject to the Commission's verification
equipment authorization procedures, marketing, labeling and
identification requirements.
III.A. Non-verified equipment.
7. Under Section 15.101(a) of the Rules,14
manufacturers are required to test and verify that Class B
external switching power supply devices comply with
Commission technical standards, ``prior to the initiation of
marketing.''15 However, under Section 2.803(c) of the
Rules, in limited circumstances, a manufacturer is allowed
to market devices prior to completion of the verification
procedure. Specifically, Section 2.803(c) provides that
devices may be ``advertised or displayed, e.g., at a trade
show or exhibition, prior to equipment authorization . . .
provided that the advertising contains, and the display is
accompanied by, a conspicuous [disclaimer] notice worded as
follows: This device has not been authorized as required by
the rules of the Federal Communications Commission. This
device is not, and may not be, offered for sale or lease,
until authorization is obtained.'' Thus, Schumacher was
allowed to exhibit models of SpeedCharger SC 2500A, SC 4000A
and SC 10000A that were not verified at AAPEX provided that
it conspicuously displayed the requisite disclaimer notice.
8. The Commission has not exempted exhibited non-
working mock-ups of non-authorized devices from the trade
show's disclaimer notice requirement. In 1976, the
Commission stated that non-authorized ``prototypes, working
models or mockups'' of devices could be advertised or
exhibited at trade shows, only if accompanied by a
conspicuous notice that the devices had not been
authorized.16 In 1997, the Commission reaffirmed that the
Section 2.803(c) trade show exception and attendant
disclaimer notice requirement applies to all radiofrequency
devices that are in the ``development, design or
preproduction stages'' and that are subject to its equipment
authorization procedures,17 including those subject the
verification procedures.18 Consistent with these Commission
decisions, manufacturers who exhibited and/or distributed
promotional materials regarding non-working mock-ups or
prototypes of radio frequency devices at trade shows,
without the conspicuous disclaimer notice, have been found
in violation of Section 2.803.19 In the instant case, we
find that Schumacher displayed, and distributed promotional
materials regarding, SpeedCharger models SC 2500A, SC 4000A
and SC 10000A without the requisite disclaimer notice in
apparent willful and repeated violation of Section 2.803(a).
III.B. Verified equipment.
9. Section 15.19(a)(3) of the Rules provides that
``[i]n addition to the requirements in part 2 of this
chapter, a device subject to . . . verification . . . shall
bear the following statement in a conspicuous location on
the device: This device complies with part 15 of the FCC
Rules. Operation is subject to the following two conditions:
(1) This device may not cause harmful interference, and (2)
this device must accept any interference received, including
interference that may cause undesired operation.'' Thus,
verified devices must be labeled and marketed in accordance
with Sections 15.19 and 2.803, respectively.
10. The Commission has not exempted a manufacturer's
display of prototypes or mock-ups of authorized (tested and
verified) devices from the above requirements. However, the
Commission has recognized that ``when the product being
demonstrated or displayed is a prototype that is not
authorized but the actual product being marketed is properly
authorized'' the language of the disclaimer notice under
Section 2.803 may not be appropriate.20 The Commission has
explained:
In many cases, manufacturers continue to use
prototypes for display or demonstration purposes,
even after obtaining authorization of the final
product. If the prototype is consistent with the
equipment that was authorized, the prototype may
be labeled as authorized and could be marketed
without the disclaimer notice. However, if the
prototype is not consistent with the equipment
that was authorized, it may not be displayed or
marketed except under the conditions . . . [set
forth in Section 2.803(c)(1) of the Rules with an
alternative advisory notice being ``Prototype.
Not for Sale] . . . However, parties displaying
prototypes of authorized products may use
additional language, if desired.21
Thus, Schumacher was allowed to exhibit mock-ups of
SpeedChargers SC 600A, SSC 1000A, SC- 1200A, SSC 1500A, and
SC 6000A (which were consistent with the verified actual
devices), provided that it either labeled each mock-up or
displayed an appropriate alternative disclaimer notice.
11. According to Schumacher, the actual working units
of SpeedChargers SC 600A, SSC 1000A, SC 1200A, SSC 1500A,
and SC 6000A were labeled, but the mock-up models exhibited
at AAPEX were not. Although the exhibited models were not
labeled, Schumacher's booth did display an alternative
disclaimer notice, which described the SpeedChargers as
``FCC Class B Compliant.'' Because Schumacher displayed the
alternative disclaimer notice, we do not find that it
violated the labeling and marketing provisions of Sections
15.19(a)(3) and 2.803(a). However, the displayed
alternative disclaimer notice may not have provided AAPEX
participants with adequate information, given that
Schumacher's booth exhibited mock-ups of both authorized,
and non-authorized, equipment. We thus caution Schumacher
to exercise greater care, by labeling or providing
alternative advisory notice for identified authorized
devices and by utilizing the standard disclaimer notice for
identified non-authorized devices.
12. Section 503(b) of the Act,22 and Section 1.80(a)
of the Rules,23 provide that any person who willfully or
repeatedly fails to comply with the provisions of the Act or
the Rules shall be liable for a forfeiture penalty. For
purposes of Section 503(b) of the Act, the term ``willful''
means that the violator knew that it was taking the action
in question, irrespective of any intent to violate the
Commission's rules, and ``repeatedly'' means more than
once.24 Based upon the material before us, it appears that
Schumacher willfully and repeatedly violated Section 302(b)
of the Act and Section 2.803(a) of the Rules by exhibiting
and advertising SpeedCharger models, which had not been
authorized in accordance with the verification procedures.
13. Section 1.80(b) of the Rules sets a base
forfeiture amount of $7,000.00 for marketing unauthorized
equipment.25 The Commission's Forfeiture Policy Statement
also specifies that the base forfeiture amounts shall be
adjusted based upon consideration of the factors enumerated
in Section 503(b)(2)(D) of the Act, 47 U.S.C. §
503(b)(2)(D), such as ``the nature, circumstances, extent
and gravity of the violation, and, with respect to the
violator, the degree of culpability, any history of prior
offenses, ability to pay, and such other matters as justice
may require.''26 The marketing of each unauthorized
Speedcharger model is a separate violation. However, under
the circumstances presented here, where no unauthorized
units were actually sold, we find that it is appropriate and
consistent with precedent to assess a $7,000 forfeiture.27
We further find Schumacher's commitment to comply with the
marketing provisions of Section 2.803(c) in the future
commendable, but such post-remedial measure does not lessen,
mitigate, or excuse its past violations of the equipment
marketing requirements.28
IV. ORDERING CLAUSES
14. Accordingly, IT IS ORDERED that, pursuant to
pursuant to Section 503(b) of the Act29 and Sections 0.111,
0.311 and 1.80 of the Rules,30 Schumacher Electric
Corporation IS hereby NOTIFIED of its APPARENT LIABILITY FOR
A FORFEITURE in the amount of seven thousand dollars
($7,000) for willfully and repeatedly violating Section
302(b) of the Act and Section 2.803(a) of the Rules.
15. IT IS FURTHER ORDERED THAT, pursuant to Section
1.80 of the Rules, within thirty days of the release date of
this Notice of Apparent Liability for Forfeiture and Order,
Schumacher Electric Corporation SHALL PAY the full amount of
the proposed forfeiture or SHALL FILE a written statement
seeking reduction or cancellation of the proposed
forfeiture.
16. Payment of the forfeiture may be made by mailing
a check or similar instrument, payable to the order of the
Federal Communications Commission, to the Forfeiture
Collection Section, Finance Branch, Federal Communications
Commission, P.O. Box 73482, Chicago, Illinois 60673-7482.
The payment must include the FCC Registration Number (FRN)
and the NAL/Acct. No. referenced in the caption.
17. The response, if any, must be mailed to the
Office of the Secretary, Federal Communications Commission,
445 12th Street, S.W., Washington, D.C. 20554, ATTN:
Enforcement Bureau - Spectrum Enforcement Division, and must
include the NAL/Acct. No. referenced in the caption.
18. The Commission will not consider reducing or
canceling a forfeiture in response to a claim of inability
to pay unless the petitioner submits: (1) federal tax
returns for the most recent three-year period; (2) financial
statements prepared according to generally accepted
accounting; or (3) some other reliable and objective
documentation that accurately reflects the petitioner's
current financial status. Any claim of inability to pay
must specifically identify the basis for the claim by
reference to the financial documentation submitted.
19. Requests for payment of the full amount of this
NAL under an installment plan should be sent to: Chief,
Revenue and Receivable Operations Group, 445 12th Street,
S.W., Washington, D.C. 20554.31
20. Under the Small Business Paperwork Relief Act of
2002, Pub L. No. 107-198, 116 Stat. 729 (June 28, 2002), the
FCC is engaged in a two-year tracking process regarding the
size of entities involved in forfeitures. If you qualify as
a small entity and if you wish to be treated as a small
entity for tracking purposes, please so certify to us within
thirty (30) days of this NAL, either in your response to the
NAL or in a separate filing to be sent to the Enforcement
Bureau - Spectrum Enforcement Division. Your certification
should indicate whether you, including your parent entity
and its subsidiaries, meet one of the definitions set forth
in the list provided by the FCC's Office of Communications
Business Opportunities (``OCBO'') set forth in Attachment A
of this NAL. This information will be used for tracking
purposes only. Your response or failure to respond to this
question will have no effect on your rights and
responsibilities pursuant to Section 503(b) of the Act. If
you have questions regarding any of the information
contained in Attachment A, please contact OCBO at (202) 418-
0990.
21. IT IS FURTHER ORDERED that a copy of this Notice
of Apparent Liability for Forfeiture and Order shall be sent
by first class mail and certified mail return receipt
requested to John Waldron, Executive Vice President,
Schumacher Electric Corporation, 801 Business Center Drive,
Mount Prospect, Illinois 20056-2179, and to David E.
Hilliard, Wiley, Rein & Fielding, LLP, 1776 K Street, NW,
Washington, DC 20006.
FEDERAL COMMUNICATIONS COMMISSION
David H. Solomon
Chief, Enforcement Bureau
Attachment A
FCC List of Small Entities
As described below, a ``small entity'' may be a small
organization,
a small governmental jurisdiction, or a small business.
(1) Small Organization
Any not-for-profit enterprise that is independently owned
and operated and
is not dominant in its field.
(2) Small Governmental Jurisdiction
Governments of cities, counties, towns, townships, villages,
school districts, or
special districts, with a population of less than fifty
thousand.
(3) Small Business
Any business concern that is independently owned and
operated and
is not dominant in its field, and meets the pertinent size
criterion described below.
Industry Type Description of Small Business
Size Standards
Cable Services or Systems
Special Size Standard -
Cable Systems Small Cable Company has 400,000
Subscribers Nationwide or Fewer
Cable and Other Program
Distribution $12.5 Million in Annual
Receipts or Less
Open Video Systems
Common Carrier Services and Related Entities
Wireline Carriers and
Service providers
1,500 Employees or Fewer
Local Exchange Carriers,
Competitive Access
Providers, Interexchange
Carriers, Operator Service
Providers, Payphone
Providers, and Resellers
Note: With the exception of Cable Systems, all size
standards are expressed in either millions of dollars or
number of employees and are generally the average annual
receipts or the average employment of a firm. Directions
for calculating average annual receipts and average
employment of a firm can be found in
13 CFR 121.104 and 13 CFR 121.106, respectively.
_________________________
1 47 U.S.C. § 302a(b).
2 47 C.F.R. § 2.803(a).
3 AAPEX was held from November 4 through 7, 2003.
4 47 C.F.R. § 15.19(a)(3).
5 See Letter from Joseph P. Casey, Chief, Spectrum
Enforcement Division, Enforcement Bureau, Federal
Communications Commission to Don Schumacher, President/CEO,
Schumacher Electric Corporation (November 14, 2003).
6 See Letter from John Waldron, Executive Vice President,
Schumacher Electric Corporation to Kathy Berthot, Deputy
Chief, Spectrum Enforcement Division, Enforcement Bureau,
Federal Communications Commission (December 4, 2003) (``LOI
Response'').
7 LOI Response at 1.
8 Id. at 2.
9 Id. at 2-3.
10 Id. at 3.
11 Id. at 3.
12 Id. In support, Schumacher submitted the verification
reports for SpeedCharger models SC 600A, SSC 1000A, SC
1200A, SSC 1500A, and SC 6000A. See LOI Response at
SCH000018-111.
13 See LOI Response at 2. In support, Schumacher attached
a representative copy of a label, which complied with the
requirements of Section 15.19(a)(3) and which had been
affixed to all of its verified SpeedCharger actual working
units. Id. at SCH000001.
14 47 C.F.R. § 15.101(a).
15 The Rules describe verification as ``a procedure where
the manufacturer makes measurements or takes the necessary
steps to insure that the equipment complies with the
appropriate technical standards. Submittal of a sample
unit or representative data to the Commission
demonstrating compliance'' is generally not required. 47
C.F.R. § 2.902(a). The Rules further provide that the
verification attaches to any device the manufacturer
subsequently markets that is identical to that which
tested complaint with applicable technical standards.
See 47 C.F.R. § 2.902(b)
16 Interpretation and Amendment of Part 2, Section 2.803 of
the Commission's Rules Relating to the Marketing if
Radiofrequency Devices, 58 FCC 2d 784, 787 ¶¶ 15-16 (1976).
17 Matter of Revision of Part 2 of the Commission's Rules
Relating to the Marketing and Authorization of Radio
Frequency Devices, 12 FCC Rcd 4533, 4533 ¶ 1 (1996) (``1996
Order''), recon. granted, 13 FCC Rcd 12928 (1998).
18 Id. at 4545 ¶ 24 (finding that further clarification of
Section 2.803 to include devices subject to verification
within the conditional trade show exception is unnecessary
because ``[v]erification, and the new declaration of
conformity, are equipment authorization procedures'' and
thus are covered by the Rule).
19 See Palmcom International Ltd., 8 FCC Rcd 332 (FOB
1993); see also GVC Technologies, Inc., 8 FCC Rcd 6667 (FOB
1993). Regarding the display of non-authorized equipment
at trade shows, the Palmcom decision stated:
Although the device itself may have been a non-
functioning prototype, the displaying of a device
that represents a radio frequency device that had
not been authorized by the FCC violates Section
2.803 of the FCC's rules. The displaying of the
device, moreover, was a form of advertising which
is also prohibited by Section 2.803. The apparent
purpose in displaying the device was to market it,
namely, to generate either immediate or future
orders to buy the device. Often at a trade show
or even in a store, there is no intent to sell
actual device on display, but the device is used
to generate orders. The actual device that is
sold may not have been constructed or assembled at
the time a purchase order is placed.
8 FCC Rcd at 332. Regarding the distribution of
promotional literature regarding non-authorized equipment
at trade shows, the Palmcom decision stated:
At the computer trade show, Palmcom was also
distributing advertising literature describing the
features of the Palmcom computer. Since Section
2.803 prohibits the advertising of devices that
have not been authorized by the FCC, this
advertising literature violated Section 2.803.
This violation was independent of the violation
resulting from the displaying of the non-
functioning prototype computer.
Id.
20 1996 Order, 12 FCC Rcd at 4546 ¶ 26.
21 Id.
22 47 U.S.C. § 503(b).
23 47 C.F.R. § 1.80(a).
24 See Southern California Broadcasting Co., 6 FCC Rcd 4387
(1991).
2547 C.F.R. § 1.80(b).
26 The Commission's Forfeiture Policy Statement and
Amendment of Section 1.80 of the Rules to Incorporate the
Forfeiture Guidelines, 12 FCC Rcd 17087, 17110 (1997),
recon. denied 15 FCC Rcd 303 (1999).
27 See, e.g., New Image Electronics, 17 FCC Rcd 3594, 3595
¶¶ 4-5 (Enf. Bur. 2002) (imposing a $7,000 forfeiture
against a retailer for marketing several models, and
selling at least one model, of non-compliant long-range
cordless telephones).
28 See AT&T Wireless Services, Inc., 17 FCC Rcd 21866,
21871 ¶ 14 (2002); KGVL, Inc., 42 FCC 2d 258, 259 (1973).
29 47 U.S.C. § 503(b).
30 47 C.F.R. § 0.111, 0.311 and 1.80.
31 See 47 C.F.R. § 1.1914.