**Before the**

Federal Communications Commission

washington, D.C. 20554

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| In the Matter of                 | * | File No. EB-07-SE-257        |
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| Polaroid Corporation             | ) | NAL/Acct. No. 200832100038   |
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|                                  | * | FRN No. 0004902185           |
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notice of apparent liability for forfeiture

**Adopted: April 9, 2008 Released: April 10, 2008**

By the Commission:

# introduction

1.  In this Notice of Apparent Liability for Forfeiture ("NAL"), we find
    Polaroid Corporation ("Polaroid") apparently liable for a forfeiture
    in the amount of seven hundred seventy five thousand dollars
    (\$775,000) for its willful and repeated violations of Section
    330(c) of the Communications Act of 1934, as amended, ("Act"),[^1]
    and Section 15.120(d)(2) of the Commission's Rules ("Rules").[^2]
    The apparent violations involve Polaroid's interstate shipment,
    after March 15, 2006, of digital television receivers that do not
    comply with the Commission's rules requiring that such receivers
    have the capability to respond to changes in the content advisory
    rating system.

# background

2.  Sections 303(x) and 330(c) of the Act were added by the
    Telecommunications Act of 1996.[^3] Section 303(x) directs the
    Commission to prescribe rules that require that television receivers
    with picture screens 13 inches or greater shipped in interstate
    commerce or manufactured in the United States to be equipped with a
    feature designed to enable viewers to block the display of all
    programs with a common rating. Section 330(c) provides that no
    person shall ship in interstate commerce or manufacture in the
    United States television receivers that do not comply with rules
    prescribed by the Commission pursuant to Section 303(x). The
    Commission adopted program blocking capability requirements for both
    analog and digital ("DTV") television receivers in 1998.[^4] In
    2004, the Commission adopted specific technical standards to
    implement V-Chip functionality for DTV receivers ("V-Chip technology
    requirement").[^5] The DTV V-Chip technology requirements provide
    that, effective March 15, 2006, digital television receivers with
    picture screens 13 inches or greater that are shipped in interstate
    commerce must be equipped with V-Chip technology to allow blocking
    of the display of programming based on its content.[^6]
    Specifically, Section 15.120(d)(2) provides that:

> Digital television receivers shall react in a similar manner as analog
> televisions when programmed to block specific rating categories.
> Effective March 15, 2006, digital television receivers will receive
> program rating descriptors transmitted pursuant to industry standard
> EIA/CEA-766-A "U.S. and Canadian Region Rating Tables (RRT) and
> Content Advisory Descriptors for Transport of Content Advisory
> Information using ATSC A/65-A Program and System Information Protocol
> (PSIP)," 2001 (incorporated by reference, see § 15.38). Blocking of
> programs shall occur when a program rating is received that meets the
> pre-determined user requirements. Digital television receivers shall
> be able to respond to changes in the content advisory rating system.

To account for manufacturers' product development cycles, the Commission
allowed an 18-month transition period for implementation of the DTV
V-Chip technology requirements.[^7]

3.  The V-Chip technology requirements implement Congress's
    determination, in the Telecommunications Act of 1996, that parents
    should be provided with "timely information about the nature of
    upcoming video programming and with the technological tools that
    allow them easily to block violent, sexual, or other programming
    that they consider harmful to their children."[^8] This
    determination was based on Congress's finding that television
    broadcast and cable programming have established a "uniquely
    pervasive presence in the lives of American children."[^9] Further,
    Congress found that empowering parents to control the presence and
    influence of television in their children's lives was a compelling
    government interest.[^10] Finally, Congress concluded that requiring
    television receiver manufacturers to include V-Chip technology in
    their products is a nonintrusive and narrowly tailored means of
    achieving that compelling government interest.[^11]

4.  In July 2007, the Enforcement Bureau ("Bureau") received a complaint
    alleging that Polaroid was shipping in interstate commerce digital
    television receivers that did not include the required V-Chip
    technology. On August 6, 2007, the Bureau issued a letter of inquiry
    ("LOI") to Polaroid.[^12] Polaroid filed a response to the LOI on
    October 9, 2007.[^13] Polaroid requested confidentiality of its LOI
    Response and that request remains pending.[^14] Accordingly,
    Polaroid's LOI Response is discussed in an Appendix hereto, and we
    are treating the Appendix as confidential at this time.

# discussion

## Polaroid Apparently Shipped Interstate Digital Television Receivers In Violation of Section 330(c) of the Act and Section 15.120(d)(2) of the Rules

5.  As noted above, under Section 330(c) of the Act and Section
    15.120(d)(2) of our rules, digital television receivers that are
    shipped in interstate commerce and/or manufactured in the United
    States[^15] shall be "able to respond to changes in the content
    advisory rating system."[^16] Based on our review of Polaroid's LOI
    Response and Supplemental Response, we find that the company
    apparently willfully and repeatedly shipped in interstate commerce
    digital television receivers that did not comply with this
    requirement. Polaroid does not dispute this finding.

## Proposed Forfeiture

6.  Based on the analysis set forth below, we conclude that Polaroid is
    apparently liable for a forfeiture in the amount of \$775,000 for
    willfully and repeatedly shipping in interstate commerce television
    receivers that do not comply with the DTV V-Chip technology
    requirements because they lack the ability to adapt to new rating
    systems in violation of Section 330(c) of the Act and Section
    15.120(d)(2) of the Rules.

7.  Under Section 503(b)(1)(B) of the Act, any person who is determined
    by the Commission to have willfully or repeatedly failed to comply
    with any provision of the Act or any rule, regulation, or order
    issued by the Commission shall be liable to the United States for a
    forfeiture penalty.[^17] To impose such a forfeiture penalty, the
    Commission must issue a notice of apparent liability and the person
    against whom such notice has been issued must have an opportunity to
    show, in writing, why no such forfeiture penalty should be
    imposed.[^18] The Commission will then issue a forfeiture if it
    finds by a preponderance of the evidence that the person has
    violated the Act or a Commission rule.[^19] We conclude under this
    standard that, as explained more fully in the Appendix, Polaroid is
    apparently liable for forfeiture for its apparent willful and
    repeated violations of Section 330(c) of the Act and Section
    15.120(d)(2) of the Rules.

8.  Under Section 503(b)(2)(D) of the Act,[^20] we may assess an entity
    that is neither a common carrier, broadcast licensee or cable
    operator a forfeiture of up to \$11,000 for each violation or each
    day of a continuing violation, up to a statutory maximum forfeiture
    of \$97,500 for any single continuing violation. In exercising such
    authority, we are required to take into account "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."[^21]

9.  The Commission's *Forfeiture Policy Statement*[^22] and Section 1.80
    of the Rules do not establish a specific base forfeiture for
    violation of the DTV V-Chip technology requirements. The Commission
    has substantial discretion, however, in proposing forfeitures.[^23]
    We may apply the base forfeiture amounts described in the
    *Forfeiture Policy Statement* and our rules, or we may depart from
    them altogether as the circumstances demand.[^24]

10. We recently issued Notices of Apparent Liability for Forfeiture
    proposing forfeitures against two manufacturers for importing and
    shipping interstate television receivers that did not comply with
    the Commission's DTV tuner requirement, reasoning that such a
    failure is more egregious, in general, than many other types of
    equipment marketing cases that come before us.[^25] In those cases,
    we found that applying a proposed forfeiture on a per model basis,
    as we have in other more routine equipment marketing cases, would
    result in forfeiture amounts that are not commensurate with the
    seriousness of the violation, and thus, we proposed a forfeiture
    based on each noncompliant unit shipped or imported.[^26] We
    proposed a similar approach for violations of our DTV V-Chip
    technology requirements involving the interstate shipment of
    receivers that are incapable of receiving program rating descriptors
    and blocking programs from viewing when the program rating meets
    pre-determined user requirements.[^27] We imposed a lower per unit
    forfeiture in the *Funai NAL*, however, because we recognized that
    television receiving devices without digital tuners, which were at
    issue in the *Syntax-Brillain* and *Regent NALs*, lack the ability
    to receive digital television broadcast signals altogether, whereas
    devices without V-Chip functionality deprive consumers of the
    important capability to block unwanted programming but may still
    receive digital television signals.[^28]

11. Considering these precedents, we conclude that violations of the
    requirement to ensure that digital television receivers have the
    capability to respond to changes in the content advisory rating
    system, while serious, are not as egregious as violations of the DTV
    tuner requirement or violations involving the failure to provide any
    V-Chip blocking capability. Significantly, television receivers that
    do not include digital tuners or do not include any V-Chip
    technology both deprive consumers of a key functionality altogether.
    By contrast, digital television receivers that lack the ability to
    adapt to a new rating system are still able to receive the existing
    program rating descriptors and block unwanted programming.
    Therefore, although each time a digital television receiver that
    lacks the ability to adapt to a new rating system is shipped
    interstate constitutes a separate violation subject to forfeiture,
    we find that such an approach would be excessively punitive, given
    the nature of these violations. Therefore, we will follow a
    per-model approach to the forfeiture calculation for cases involving
    the interstate shipment of receivers that do not have the capability
    to respond to changes in the rating system.

12. Section 503(b)(6) of the Act bars the Commission from proposing a
    forfeiture for violations that occurred more than a year prior to
    the issuance of a NAL.[^29] Section 503(b)(6) does not, however, bar
    the Commission from assessing whether Polaroid's conduct prior to
    that time period apparently violated the rules and from considering
    such conduct in determining the appropriate forfeiture amount for
    violations that occurred within the one-year statutory period.[^30]
    Thus, while we may consider that Polaroid's prior conduct violated
    the rules, the forfeiture amount we propose herein relates to
    Polaroid's apparent violations that have occurred within the past
    year.

13. As noted above, in this case we may propose a forfeiture of up to
    \$11,000 for each violation or each day of a continuing violation,
    up to a statutory maximum forfeiture of \$97,500 for any single
    continuing violation. In view of the important public policy
    considerations underlying this requirement, we conclude that,
    generally, the appropriate per model forfeiture amount in such cases
    will be \$25,000.[^31] We find that calculating forfeitures for the
    failure to include the capability to respond to changes in the
    rating system using this per model approach will result in
    forfeiture amounts that reflect the seriousness of the violations
    and will deter future misconduct. In cases presenting exacerbating
    factors, or if this enforcement approach proves to be an inadequate
    deterrent to Polaroid or other entities that ship television
    receivers in interstate commerce, however, we will not hesitate to
    revisit this forfeiture calculation approach.

14. Pursuant to Polaroid's confidentiality request, we will not specify
    in the *NAL* the precise number of non-compliant models that
    Polaroid shipped interstate in apparent violation of our rules. We
    will say, however, that based on the record in this case, Polaroid's
    violations merit a large proposed forfeiture. The regulatory
    deadlines at issue have been in place in some form since 1998. The
    Commission announced the application of V-Chip technology
    requirements for digital television receivers in 2004 and gave
    manufacturers 18 months, consistent with the industry's design cycle
    for a television receiver model, to comply.[^32] For more than 18
    months after the March 15, 2006 deadline, however, Polaroid
    continued to ship in interstate commerce digital television
    receivers that do not have the ability to respond to changes in the
    content advisory rating system. These unlawful shipments were
    substantial both in terms of the number of non-compliant models and
    the total number of non-compliant units. For these reasons, and
    based on the per model approach described above, we propose a
    forfeiture of \$775,000 for Polaroid's willful and repeated
    interstate shipment of television receivers that do not comply with
    the DTV V-Chip technology requirements in violation of Section
    330(c) of the Act and Section 15.120(d)(2) of the Rules. The
    interstate shipments on which we are basing this proposed forfeiture
    all occurred within the past year, i.e., within the applicable
    one-year statute of limitations period.[^33]

# ordering clauses

15. Accordingly, **IT IS ORDERED** that, pursuant to Section 503(b) of
    the Act, and Section 1.80 of the Rules, Polaroid Corporation is
    **NOTIFIED** of its **APPARENT LIABILITY FOR A FORFEITURE** in the
    amount of seven hundred seventy five thousand dollars (\$775,000)
    for willful and repeated violations of Section 330(c) of the Act and
    Section 15.120(d)(2) of the Rules.

16. **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, Polaroid Corporation **SHALL
    PAY** the full amount of the proposed forfeiture or **SHALL FILE** a
    written statement seeking reduction or cancellation of the proposed
    forfeiture. Payment of the forfeiture must be made by check or
    similar instrument, payable to the order of the Federal
    Communications Commission. The payment must include the NAL/Account
    Number and FRN Number referenced above. Payment by check or money
    order may be mailed to Federal Communications Commission, P.O. Box
    979088, St. Louis, MO 63197-9000. Payment by overnight mail may be
    sent to U.S. Bank -- Government Lockbox #979088, SL-MO-C2-GL, 1005
    Convention Plaza, St. Louis, MO 63101. Payment by wire transfer may
    be made to ABA Number 021030004, receiving bank TREAS/NYC, and
    account number 27000001. For payment by credit card, an FCC Form 159
    (Remittance Advice) must be submitted. When completing the FCC Form
    159, enter the NAL/Account number in block number 23A (call
    sign/other ID), and enter the letters "FORF" in block number 24A
    (payment type code). Requests for full payment under an installment
    plan should be sent to: Chief Financial Officer \-- Financial
    Operations, 445 12th Street, S.W., Room 1-A625, Washington,
    D.C.  20554. Please contact the Financial Operations Group Help Desk
    at 1-877-480-3201 or Email: <ARINQUIRIES@fcc.gov> with any questions
    regarding payment procedures. 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.

17. 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 practices; 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.

18. **IT IS FURTHER ORDERED** that a copy of this Notice of Apparent
    Liability for Forfeiture shall be sent by first class mail and
    certified mail return receipt requested to William M. Boyd, Senior
    Vice President and General Counsel, Polaroid Corporation, 1265 Main
    Street, Waltham, MA 02451, and to its counsel, David Hilliard, Esq.
    and John M. Burgett, Esq., Wiley Rein LLP, 1776 K Street, N.W.,
    Washington, D.C. 20006.

    FEDERAL COMMUNICATIONS COMMISSION

Marlene H. Dortch

Secretary

[^1]: 47 U.S.C. § 330(c).

[^2]: 47 C.F.R. § 15.120(d)(2).

[^3]: *See* Pub. L. No. 104-104, 110 Stat. 56 (1996).

[^4]: *In the Matter of Technical Requirements to Enable Blocking of
    Video Programming Based on Program Rating*, Report and Order, 13 FCC
    Rcd 11248 (1998) ("*V-Chip Report and Order*").

[^5]: *In the Matter of Second Periodic Review of the Commission's Rules
    and Policies Affecting the Conversion to Digital Television*, Report
    and Order, 19 FCC Rcd 18279 (2004) ("*Second DTV Periodic Review
    Report and Order*"). The V-Chip technology requirements also apply
    to devices sold without an accompanying display device. *Id.* at
    18348 ("Similar to our requirements for closed caption capabilities
    in digital television receivers, the rules will also be applicable
    to DTV tuners which are sold without an associated display
    device.").

[^6]: *Id.* at 18347-49 ¶155-59.

[^7]: *Id.* at 18348-49 ¶159.

[^8]: *V-Chip Report and Order*, 13 FCC Rcd at 11248 ¶ 2.

[^9]: Pub. L. No. 104-104, 110 Stat. 56 (1996).

[^10]: *Id.*

[^11]: *Id.*

[^12]: *See* Letter from Kathryn S. Berthot, Chief, Spectrum Enforcement
    Division, Enforcement Bureau to Polaroid Corporation, Telecom
    Department (August 6, 2007) ("LOI").

[^13]: *See* Letter from William M. Boyd, Senior Vice President and
    General Counsel, Polaroid Corporation, to Kathryn Berthot, Chief,
    Spectrum Enforcement Division, Enforcement Bureau (September 19,
    2007) ("LOI Response"); Letter from Scott W. Hardy, Executive Vice
    President, Technology and Management, Polaroid Corporation, to
    Kathryn Berthot, Chief, Spectrum Enforcement Division, Enforcement
    Bureau (December 19, 2007) ("Supplemental Response").

[^14]: *Id.*

[^15]: *See* 47 U.S.C. § 303(c)(1); 47 C.F.R. § 15.120(b).

[^16]: 47 C.F.R. § 15.120(d)(2).

[^17]: 47 U.S.C. § 503(b)(1)(B); 47 C.F.R. § 1.80(a)(1).

[^18]: 47 U.S.C. § 503(b); 47 C.F.R. § 1.80(f).

[^19]: *See, e.g.,* *SBC Communications, Inc.*, Forfeiture Order, 17 FCC
    Rcd 7589, 7591 ¶ 4 (2002).

[^20]: 47 U.S.C. § 503(b)(2)(D). The Commission twice amended Section
    1.80(b)(3) of the Rules, 47 C.F.R. § 1.80(b)(3), to increase the
    maximum forfeiture amounts, in accordance with the inflation
    adjustment requirements contained in the Debt Collection Improvement
    Act of 1996, 28 U.S.C. § 2461. *See Amendment of Section 1.80 of the
    Commission's Rules and Adjustment of Forfeiture Maxima to Reflect
    Inflation,* Order, 15 FCC Rcd 18221 (2000) (adjusting the maximum
    statutory amounts from \$10,000/\$75,000 to \$11,000/\$87,500);
    *Amendment of Section 1.80 of the Commission's Rules and Adjustment
    of Forfeiture Maxima to Reflect Inflation,* Order, 19 FCC Rcd 10945
    (2004) (adjusting the maximum statutory amounts from
    \$11,000/\$87,500 to \$11,000/\$97,500).

[^21]: 47 U.S.C. § 503(b)(2)(E). *See also* 47 C.F.R. § 1.80(b)(4), Note
    to paragraph (b)(4): Section II. Adjustment Criteria for Section 503
    Forfeitures.

[^22]: *See The Commission's Forfeiture Policy Statement and Amendment
    of Section 1.80 of the Rules to Incorporate the Forfeiture
    Guidelines,* Report and Order, 12 FCC Rcd 17087, 17115 (1997),
    *recon. denied*, 15 FCC Rcd 303 (1999) ("*Forfeiture Policy
    Statement*").

[^23]: *See, e.g., InPhonic, Inc.,* Order of Forfeiture and Further
    Notice of Apparent Liability, 22 FCC Rcd 8689, 8699 ¶ 24 (2007);
    *Globcom*, 21 FCC Rcd at 4723-24 ¶ 34.

[^24]: *See* 47 C.F.R. §1.80(b)(4) ("The Commission and its staff *may*
    use these guidelines in particular cases \[, and\] *retain the
    discretion* to issue a higher or lower forfeiture than provided in
    the guidelines, to issue no forfeiture at all, or to apply
    alternative or additional sanctions as permitted by the statute.")
    (emphasis added).

[^25]: *Syntax-Brillian Corporation*, Notice of Apparent Liability for
    Forfeiture, 22 FCC Rcd 10530 (2007), *response pending*
    ("*Syntax-Brillian NAL*"); *Regent U.S.A., Inc*., Notice of Apparent
    Liability for Forfeiture, 22 FCC Rcd 10520 (2007) (forfeiture paid)
    ("*Regent NAL*"). The DTV tuner requirement requires that all new
    television broadcast receivers that are imported into the United
    States or shipped in interstate commerce be capable of receiving the
    signals of DTV broadcast stations over-the-air. *See* 47 C.F.R. §
    15.117(i)(1)(i).

[^26]: *Syntax-Brillian NAL*, 22 FCC Rcd at 10535-36 ¶¶ 13-15
    (concluding that applying a proposed forfeiture on a per-model basis
    for shipment of television receivers that were not compliant with
    the DTV tuner mandate would result in forfeiture amounts
    incommensurate with the seriousness of the violations); *Regent
    NAL*, 22 FCC Rcd at 10525-26 ¶¶ 13-15 (same). To reflect the
    increasing seriousness of the violation as the number of
    non-compliant units shipped or imported rises, we assessed
    forfeiture amounts on a tier-by-tier basis, increasing the
    forfeiture amount as the number of units shipped or imported
    increased. *See e.g., Syntax-Brillian NAL*, 22 FCC Rcd 10535-36 ¶ 15
    (Tiers and per-unit forfeiture amounts were: 0-1000 units: \$50 per
    unit, 1001-2500 units: \$75 per unit, 2501-5000 units: \$100 per
    unit, 5001-10000 units: \$125 per unit, 10001-20000 units: \$150 per
    unit, 20001-30000 units: \$175 per unit, 30001-40000 units: \$200
    per unit, 40001-50000: \$225 per unit, and 50001+ units: \$250 per
    unit.).

[^27]: *Funai Corporation, Inc.*, Notice of Apparent Liability for
    Forfeiture, 22 FCC Rcd 19663, 19667-8 ¶ 14 (2007), *response
    pending* ("*Funai NAL*").

[^28]: *Id.* (Tiers and per-unit forfeiture amounts were: 0-1000 units:
    \$12.50 per unit, 1001-2500 units: \$18.75 per unit, 2501-5000
    units: \$25 per unit, 5001-10000 units: \$31.25 per unit,
    10001-20000 units: \$37.50 per unit, 20001-30000 units: \$43.75 per
    unit, 30001-40000 units: \$50 per unit, 40001-50000: \$56.25 per
    unit, and 50001+ units: \$62.50 per unit.).

[^29]: 47 U.S.C. § 503(b)(6).

[^30]: *See* 47 U.S.C. § 503(b)(2)(E), 47 C.F.R. § 1.80(b)(4); *see also
    Behringer USA, Inc.*, Notice of Apparent Liability for Forfeiture,
    21 FCC Rcd 1820, 1827-28 ¶ 22 (2006), *forfeiture ordered*,
    Forfeiture Order, 22 FCC Rcd 10451 (2007); *Globcom, Inc. d/b/a
    Globcom Global Communications*, Notice of Apparent Liability for
    Forfeiture, 18 FCC Rcd 19893, 19903 ¶ 23 (2003), *forfeiture
    ordered*, Forfeiture Order, 21 FCC Rcd 4710 (2006) ("*Globcom*");
    *Roadrunner Transportation, Inc.,* Forfeiture Order, 15 FCC Rcd
    9669, 9671-72 ¶ 8 (2000); *Cate Communications Corp.,* Memorandum
    Opinion and Order, 60 RR 2d 1386, 1388 (1986); *Eastern Broadcasting
    Corp.,* Memorandum Opinion and Order, 10 FCC 2d 37, 37-38 ¶ 3 (1967)
    *recon. denied*, 11 FCC 2d 193, 195 ¶ 6 (1967).

[^31]: Because each non-compliant unit shipped interstate is a separate
    violation, we could impose a far higher forfeiture than \$25,000 for
    each model. As noted above, however, because of the circumstances of
    this rule and these violations, we consider \$25,000 per model to be
    sufficient. We have used this amount in other contexts. *Cf.*
    *AboCom Systems, Inc.*, Notice of Apparent Liability for Forfeiture,
    21 FCC Rcd 7875, 7878-79 ¶ 11 (Enf. Bur. Spectrum Enf. Div. 2006),
    *forfeiture ordered*, 21 FCC Rcd 13140 (Enf. Bur. Spectrum Enf. Div.
    2006), *recon. denied*, 22 FCC Rcd 7448 (Enf. Bur. 2007) (proposing
    a \$25,000 forfeiture against an equipment manufacturer for
    marketing one model of radio frequency equipment that did not comply
    with the terms of its equipment authorization and technical
    requirements specified in the rules).

[^32]: *Second DTV Periodic Review Report and Order*, 19 FCC Rcd at
    18348-49 ¶ 159.

[^33]: *See supra* paragraph 12.