Hong Kong supplier to U.S. distributor is charged with selling noncompliant devices into the United States.
Here is an unquestioned violation of FCC rules. But it raises the question of who answers for that violation. The outcome will particularly interest those who manufacture FCC-regulated equipment.
Richfield Electronics is a Hong Kong-based company that makes an FM-band transmitter for distributing music through a residence. It builds the devices according to designs provided by TAW-Global, based in Michigan, and then ships them to TAW, which distributes them in the United States. Richfield had the device properly certified in 2002 as being in compliance with the applicable FCC rules. Intended to protect commercial FM broadcasters from interference that could be caused by such devices, those rules are stringent.
Some time after receiving certification, Richfield modified the antenna in an effort (it said) to improve the sound quality. The change increased the transmitted power, enough to take the device out of compliance. Richfield admits to having sent at least 2,500 of the noncompliant units to TAW, although the FCC, finding inconsistencies in Richfield’s responses, thinks this number may be low. The FCC also identified problems with Richfield’s certification labeling.
Back in 2009, the FCC issued a Notice of Apparent Liability against Richfield. It proposed forfeitures of $14,000 for marketing non-compliant and unauthorized equipment (along with another $4,000 for the labeling issues).
Richfield objected, arguing that it had not “marketed” any noncompliant devices in the United States. According to Richfield, any U.S. marketing was done by TAW, not Richfield.
The FCC agreed that TAW was itself guilty of a violation. Indeed, the FCC had earlier issued a warning to TAW about the same device. A warning, rather than a fine, is usually all the FCC can do about a first offense by a distributor.
But TAW’s liability was immaterial to Richfield’s exposure. An FCC Forfeiture Order has now rejected Richfield’s arguments and found it liable for the full $18,000.
The FCC rules define “marketing” very broadly to include:
sale or lease, or offering for sale or lease, including advertising for sale or lease, or importation, shipment, or distribution for the purpose of selling or leasing or offering for sale or lease.
The FCC found Richfield had “marketed” the noncompliant units by offering them to TAW, selling them to TAW, and shipping them to TAW. It ruled also that by holding an FCC certification, Richfield had the responsibility of maintaining compliance with the FCC’s technical and labeling rules.
(We think the certification element is a stretch. Richfield would not violate the rules by manufacturing a device out of conformity with its certification, so long as it did not market that device in the United States. And marketing a noncompliant device would be the same offense whether or not Richfield holds a certification. In a case like this one, the certification is beside the point.)
In short: the fact that an equipment manufacturer provides its wares to some other company for marketing will not necessarily relieve it of liability. The FCC holds everyone in the distribution chain, from manufacturer to retailer, whether in the U.S. or offshore, equally responsible for complying with its rules. Any company, anywhere in that chain, must know and follow the FCC’s requirements.