**Before the**

**Federal Communications Commission**

**Washington, D.C. 20554**

+----------------------------------+---+-------------------------------+
| In the Matter of                 | * | File No. EB-03-SE-291         |
|                                  | * |                               |
| Schumacher Electric Corporation, | ) | NAL/Acct. No. 200432100010    |
|                                  | * |                               |
| Mt. Prospect, Illinois           | * | FRN \# 0010291185             |
|                                  |   |                               |
|                                  | * |                               |
|                                  | * |                               |
|                                  | ) |                               |
|                                  | * |                               |
|                                  | * |                               |
|                                  |   |                               |
|                                  | * |                               |
|                                  | * |                               |
|                                  | ) |                               |
|                                  | * |                               |
|                                  | * |                               |
|                                  |   |                               |
|                                  | * |                               |
|                                  | * |                               |
|                                  | ) |                               |
|                                  | * |                               |
|                                  | * |                               |
+----------------------------------+---+-------------------------------+

**NOTICE OF APPARENT LIABILITY FOR FORFEITURE**

**Adopted:** April 8, 2004 **Released:** April 12, 2004

By the Chief, Enforcement Bureau:

# 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]

#  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]

#  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.

## 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).

## 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]

#  ORDERING CLAUSES

14. Accordingly, **IT IS ORDERED** that, pursuant to pursuant to Section
    503(b) of the Act[^29] 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***                     |                                     |
+--------------------------------+-------------------------------------+
| Cable Systems                  | Special Size Standard --            |
|                                |                                     |
|                                | **Small Cable Company** has 400,000 |
|                                | Subscribers Nationwide or Fewer     |
+--------------------------------+-------------------------------------+
| Cable and Other Program        | \$12.5 Million in Annual Receipts   |
| Distribution                   | or Less                             |
+--------------------------------+-------------------------------------+
| Open Video Systems             |                                     |
+--------------------------------+-------------------------------------+
| ***Common Carrier Services and |                                     |
| Related Entities***            |                                     |
+--------------------------------+-------------------------------------+
| Wireline Carriers and Service  | 1,500 Employees or Fewer            |
| providers                      |                                     |
+--------------------------------+-------------------------------------+
| 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).

[^25]: 47 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.