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Home›Conditional Sales Contract›Industry beware! Key Terms Apply to New FCC Presale Equipment Authorization Rules | Wiley Kidney LLP

Industry beware! Key Terms Apply to New FCC Presale Equipment Authorization Rules | Wiley Kidney LLP

By Mabel McCaw
April 22, 2022
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The new FCC rules (summarized in more detail here) allow the conditional marketing and sale of radio frequency (RF) devices to consumers prior to obtaining FCC equipment authorization if certain conditions are met. The new rules give innovators more flexibility to engage in crowdfunding and other marketing campaigns and can help consumers gain faster access to new devices. For example, the new rules allow importation of RF devices with limited prior authorization into the United States and allow certain pre-sale activities such as packaging and delivery of devices to point of sale.

While the new rules provide an important opportunity to better gauge consumer interest and expedite the rollout of new post-approval products, industry must be diligent in complying with the various FCC requirements, summarized below. below, before engaging in any pre-sales activity. Failure to comply with the terms could result in the receipt of a Letter of Investigation (LOI) from the FCC Enforcement Office, ultimately leading to civil forfeiture or voluntary contribution to the US Treasury.

Product delivery. Devices can do not be delivered to an end user until fully authorized under applicable FCC equipment authorization procedures (that is to saycertification, which involves testing by an FCC-recognized test laboratory, granting certification by a telecommunications certification body (TCB) and listing the devices in a Commission database, and/or the Supplier’s Declaration of Conformity (SDoC), which is a self-certification process).

Devices subject to the FCC certification process may, however, be delivered to distribution centers or retailers for pre-sale activities after compliance testing and submission of a certification request to a TCB. Devices subject to the SDOC procedure must obtain an authorization before they can be transferred for presale activities.

Customer Disclosure. Prospective purchasers should be informed: (1) that the equipment is subject to FCC rules and that delivery to the end user is conditional upon successful completion of the applicable authorization process; (2) that the FCC rules do not address the applicability of consumer protection, restrictive covenants, or other provisions under federal or state law; and (3) any liability of Seller to Buyer in the event the applicable Equipment Authorization process is not successfully completed, including information on any refund policy.

FCC label. Devices subject to the Certification procedure that are physically transferred as part of pre-sale activities must include either on the device itself or on its packaging, a removable temporary label indicating:

“This device may not be delivered to end users, displayed, or used until the device has received certification from the FCC. Under penalty of law, this label must not be removed until you receive a grant from FCC certified.

Tracking and recovery. The seller must have a process in place to track and, if the equipment is not successfully certified, recover any device physically transferred for pre-sale activities. Recovery should occur as soon as it is determined that device certification cannot be completed.

Legal responsibility. Legal responsibility for the device shall rest with the manufacturer, developer, importer or ultimate consignee of the device, or their designated customs broker until the device has been fully cleared.

Record keeping. For a period of 5 years, the seller must keep records of each conditional sale contract. These records must identify: the device name and product identifier, the quantity conditionally sold, the date the device was authorized for authorization, the expected FCC ID number, and the identity of the conditional buyer, including his contact details. These recordings must be provided to the FCC upon request.

[View source.]

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