Earlier this month, the Federal Communications Commission (“FCC”) asked for comment on a Petition for Rulemaking filed by the Consumer Technology Association (“CTA”) that proposes to modify the FCC’s device authorization rules to allow the importation and conditional, preauthorization marketing and sales of radiofrequency (“RF”) devices that have not yet been approved under the FCC’s rules. The deadline for filing comments supporting or opposing the petition is July 9, 2020.
Section 302 of the Communications Act grants the FCC authority to prevent RF devices from causing harmful radiofrequency interference. The FCC has exercised this authority by adopting rules regulating all phases of an RF device’s lifecycle, from manufacturing or import to marketing and sales. Generally, no device capable of emitting radiofrequency energy may be manufactured, imported, marketed, or sold unless that device has been determined to meet FCC rules concerning authorization, identification and labeling, and recordkeeping. The FCC’s authorization requirements vary somewhat depending on the class of RF device, but authorization typically requires the completion of emissions and interference testing.
Section 2.803 of the FCC’s rules generally prohibits the marketing of any unauthorized RF device. See 47 C.F.R. § 2.803. The FCC’s definition of “marketing” extends to any sale or lease, or offering for sale or lease, including advertising, as well as any importation, shipment, or distribution for the purpose of selling or leasing. See id. § 2.803(a). However, there are limited exceptions to this blanket prohibition. Specifically, the FCC’s rules permit:
- conditional sales contracts between manufacturers and wholesalers or retailers provided delivery is made contingent upon compliance with the Commission’s authorization and technical requirements;
- offering for sale an RF device that is in the conceptual, developmental, design, or preproduction stage provided that device is offered for sale solely to a business, commercial, industrial, scientific, or medical user and the prospective buyer is advised in writing at the time of the offer that the equipment is subject to FCC rules and that the equipment will comply with these rules prior to delivery to the buyer or distribution centers;
- advertising or displaying an unauthorized device (e.g., at a trade show or exhibition) provided the advertisement or display is accompanied by a conspicuous notice stating that the device is unauthorized and is not, and may not be, offered for sale until authorization is obtained; and
- selling an evaluation kit (an assembly of components, subassemblies, or circuitry, including software) provided the sales are limited to product developers, software developers, and system integrators, and the kit includes a notice stating that the kit is not a finished product and, when assembled, may not be resold or otherwise marketed until authorization is obtained.
Id. § 2.803(c) (emphasis added).
CTA’s petition focuses on the first two exceptions and seeks revisions—or, in the alternative, a waiver—of these exceptions to allow conditional sales of unauthorized RF devices directly to consumers. Specifically, CTA’s petition proposes that the FCC revise the first exception to expand permissible pre-authorization conditional sales to “potential customers” instead of just “wholesalers or retailers” and delete the second exception—which CTA argues addresses an even smaller class of prospective buyers—altogether.
In addition to the general prohibition on pre-authorization sales of RF devices, the FCC’s rules also broadly prohibit the importation of unauthorized devices. Under section 2.1204 of the FCC’s rules, the importation of unauthorized RF devices generally is prohibited, and manufacturers may import only a certain number of unauthorized devices for use in limited contexts such as trade shows, testing to determine compliance with FCC rules, and product development. See 47 C.F.R. § 2.1204(a).
CTA’s petition seeks to revise section 2.1204 to permit the importation of limited numbers of RF devices prior to authorization for the specific purpose of preparing the devices for retail sales. These permissible “pre-marketing activities” would include sales preparation such as loading devices with software to demonstrate specific features of the devices when used in retail locations, packaging devices, and delivering limited quantities of the devices to retail locations. However, these activities would exclude any display of the devices prior to authorization.
To ensure that any devices imported under this proposed “pre-marketing activities” exception would not cause harmful interference or fall into the hands of consumers, CTA’s petition proposes the following safeguards:
- Imports would be limited to RF devices for which manufacturers have a reasonable basis to believe authorization will be granted within 30 days of importation;
- Imported devices would not be displayed or advertised at retail locations prior to equipment authorization and would bear labels indicating this display and advertisement restriction
- Imported devices would remain under the ownership of the device manufacturer;
- Manufacturers would be required to have processes in place allowing retrieval of the equipment from retailers should equipment authorization be denied; and
- Imports for “pre-marketing activities” would be limited to 4,000 devices unless otherwise permitted by the Chief of the Commission’s Office of Engineering and Technology.
If the FCC is persuaded by commenters, the next step will be for the agency to issue a Notice of Proposed Rulemaking formally proposing to loosen the marketing and importation restrictions.