AWID Halts Sales of RFID Readers

By Mary Catherine O'Connor

The California-based company is investigating claims that at least some its RFID interrogators are not FCC-certified.

Applied Wireless Identifications (AWID), a Morgan Hill, Calif., manufacturer of interrogators and interrogator modules, says it is looking into claims that at least some of its products are not certified as compliant with Federal Communications Commission (FCC) rules. As a result of its investigation, the company has stopped shipping and importing all of its products and ousted its chairman and CEO, Donny Lee.

The FCC regards RFID devices as low-power transmitting devices and, therefore, does not require users of RFID devices to obtain a license to operate them. Before RFID device manufacturers can begin marketing products, however, they must submit them to the FCC for testing. The FCC then determines if the devices are compliant with the FCC's Part 15 rules for intentional radiators. If the agency grants authorization, the manufacture must label the device as being compliant before selling it.

"We know that we have products that are not in compliance with the FCC," says AWID vice president of marketing, Louis Sirico, "but we're currently investigating exactly what we have that is in compliance, and what we have that is not."

The issue first came to light on Mar. 20, when an AWID customer notified the company that devices it purchased were not listed on the FCC Web site as being certified. On April 5, AWID management hired the law firm Orrick, Herrington & Sutcliffe to head an independent investigation into the noncompliance and who was responsible. Additionally, AWID has retained Wilkinson Barker Knauer, which is working with Orrick, Herrington & Sutcliffe on matters relating to the FCC. Wilkinson Barker Knauer is also serving as a liaison between AWID and the FCC.

On April 7, AWID posted a notice on its Web site that Larry Kellam, a retired Procter & Gamble executive who previously led that company's EPC efforts, had assumed the role of interim chairman and CEO. Kellam has been on the AWID board for the past two years.

"Donny Lee was terminated by our board of directors when he was unable to answer satisfactorily questions regarding FCC compliance," says Sirico. In addition to being chairman and CEO, Lee also served as head of engineering. According to Siricio, ensuring FCC compliance was one of Lee's roles at AWID.

AWID stopped shipping and importing its goods about a month ago, Sirico says. In addition, the firm's Web site currently does not include any specific product names or specifications. Sirico says AWID has begun contacting its customers about the compliance investigation, but that it has not advised any customers to discontinue use of their AWID products.

"We are not aware of any interference, health or safety issues with regard to using any AWID products," says Sirico. He notes that AWID uses a large network of distributors and is in the process of asking these resellers to inform end users of AWID products about the investigation. He says the firm is also using the news media to get word out.

AWID sells complete, ready-to-use RFID interrogators, as well as interrogator modules that third parties can embed in handheld readers and other RFID devices. These manufacturers must first obtain FCC certification on their own. AWID says that to the best of its knowledge, all such third parties have satisfied their FCC certification obligations for the RFID products they sell.

"RFID [regulatory] compliance has been a nonstarter" for end users of RFID thus far, says Ronald Quirk, counsel at law firm Venable LLP in Washington, D.C. They expect the products they purchase to be compliant with the FCC. "This is an extremely serious issue, and people need to pay attention to it," he says. When a manufacturer's infraction with FCC rules is minor, he notes, it does not normally impact the end user negatively. In cases where the infraction is major, however—such as when a device is operating at an improper frequency and could potentially interfere with medical equipment—the results could be very serious.

"Noncompliance could have a devastating impact on a business because, in some cases, the FCC could force an end user to stop using equipment if it is not compliant," Quirk explains. He adds that it is very important for end users to put provisions in their sales contracts to handle FCC noncompliance and other issues. "They should get their equipment replaced and be compensated for lost sales that result from no longer being able to use the equipment," he says.