On May 11, 2020, the FCC issued an order granting a request for waiver filed by GE Healthcare relating to its health care equipment that is subject to the FCC’s equipment authorization rules. GE requested a waiver because it was unable to obtain certain components contained within its healthcare equipment due to severe supply chain disruptions caused by the COVID-19 pandemic.
In addition to regulating non-governmental use of spectrum in the United States, the FCC also has a prominent role in ensuring that the devices utilizing the spectrum comply with its technical rules. Not only has the FCC created a regulatory structure for those RF devices that intentionally radiate energy (i.e., cellphones, wi-fi routers), it also has rules to regulate those devices that unintentionally radiate energy (i.e., LED lightbulbs or power cords). In addition to setting limits on the power level of these devices, the FCC also enforces its rules limiting importation and marketing prior to receiving the necessary equipment authorization.
While the FCC has been flexible in granting COVID-19 related relief from its rules in the past few months, approval of the GE Healthcare waiver request is particularly helpful because it represents a fairly comprehensive snapshot of how the FCC’s importation, marketing and operational regulations are applied in the real world.
GE Healthcare explained in the waiver request, which was filed on April 17, 2020, that it was having difficulty obtaining components for certain devices that had previously been shown to comply with the FCC’s technical rules. Changes to the components in previously authorized devices would likely need to go through a new round of equipment testing to demonstrate compliance with the FCC’s technical rules. Without this new testing, GE’s ability to import, market and operate the modified devices would be severely limited. This limitation, in turn, would impact the ability of medical professionals to use these devices in their treatment of COVID-19-related illnesses.
For example, the FCC limits the importation of RF devices if the manufacturer has not received FCC approval through the equipment authorization procedures. With few exceptions, the FCC limits the number of unapproved devices to 4,000 or fewer for testing, product development or suitability for marketing. Even under those conditions, the devices may not be offered for sale or marketed to the public.
In addition, the FCC’s rules also substantially limit the marketing or sale of products that have yet to be approved. The FCC will permit the marketing of devices that have not been authorized, but only if the devices are (i) in the conceptual, developmental, design or pre-production stage, (ii) offered for sale only to business, commercial, industrial, scientific or medical users, and (iii) accompanied with a notice advising customers that the equipment is subject to FCC approval and delivery of the product will occur only after such approval is received.
Another exception exists for devices to be sold as “evaluation kits” so long as the product is limited to product developers, software developers and system integrators. These customers must also be advised that the product (i) has not yet received equipment authorization, (ii) may not be resold to the public and (iii) must be operated pursuant to the FCC’s rules, or pursuant to an authorized experimental/market trial license.
Finally, the FCC prohibits the operation of RF devices that have yet to go through the equipment authorization process. There are exceptions for devices that (i) are designed to operate under experimental and market trial authorizations, (ii) operate on spectrum that is otherwise unlicensed, or (iii) are used solely for demonstrations at trade shows, exhibitions and evaluation purposes.
In the GE waiver order, the FCC granted relief from these regulations but imposed restrictions. In particular, the FCC waived compliance with the importation, marketing or operational limitations for a period of 18 months, but the agency will require GE Healthcare to conduct internal compliance testing for all covered devices prior to their use.
Further, the GE waiver order limits the distribution of the covered devices to only the premises of health care facilities, where the devices must be used at the direction of authorized health care providers. Also, the devices must be labeled with a notice that the operation of the devices is subject to an FCC waiver. Finally, the FCC will require GE Healthcare to submit the covered devices for equipment authorization testing within 18 months of when GE Healthcare distributed the device to the healthcare facility. Those devices that were not submitted for equipment authorization testing by the end of the 18-month period must be rendered inoperable or retrieved by GE Healthcare.
In light of the supply chain disruptions that have been widely reported, it is likely that other manufacturers may be forced to consider alternative sources for components installed in their products. To the extent that these products are regulated by the FCC, the GE Healthcare decision demonstrates the willingness of the FCC to accommodate waiver requests.
On the other hand, the FCC is less willing to overlook lapses of its equipment authorization rules when they are discovered after the fact, especially when such lapses are brought to the FCC’s attention as the result of an investigation or complaint from the public. The FCC has issued fines and forfeitures to manufacturers that fail to comply with the FCC’s rules, either intentionally or seemingly honest mistakes. Therefore, manufacturers of products that use the spectrum should take a close look at the current supply chain procedures, and determine whether they need assistance in seeking relief from the FCC.
Pillsbury’s experienced, multidisciplinary COVID-19 Task Force is closely monitoring the global threat of COVID-19 and providing real-time advice across industry sectors, drawing on the firm’s capabilities in crisis management, employment law, insurance recovery, real estate, supply chain management, cybersecurity, corporate and contracts law and other areas to provide critical guidance to clients in an urgent and quickly evolving situation. For more thought leadership on this rapidly developing topic, please visit our COVID-19 (Coronavirus) Resource Center.