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XLNT Idea, Inc

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Released: December 9, 2009

Federal Communications Commission

DA 09-2545

Before the

Federal Communications Commission

Washington, D.C. 20554

In the Matter of
)
)

File No. EB-07-SE-166
XLNT Idea, Inc.
)
NAL/Acct. No. 200932100004
San Diego, California
)
FRN # 0018234369

FORFEITURE ORDER

Adopted: December 7, 2009

Released: December 9, 2009

By the Chief, Spectrum Enforcement Division, Enforcement Bureau:

I. INTRODUCTION

1.
In this Forfeiture Order (“Order”), we issue a monetary forfeiture in the amount of
fourteen thousand dollars ($14,000) against XLNT Idea, Inc. (“XLNT Idea”) for willful and repeated
violations 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 The noted violations involve the marketing of
unauthorized digital devices in the United States.
2.
On November 4, 2008, the Chief, Spectrum Enforcement Division, Enforcement Bureau
(“Division”) issued a Notice of Apparent Liability (“NAL”) for Forfeiture to XLNT Idea in the amount of
fourteen thousand dollars ($14,000).3 XLNT Idea filed a response to the NAL on December 5, 2008.4

II. BACKGROUND

3.
On February 11, 2008, the Division issued a letter of inquiry ("LOI")5 to XLNT Idea
regarding a complaint received alleging that XLNT Idea was marketing the Nexis 100AP AutoPrinter,
the Nexis 100AP Publisher, and the Xi440 CD/DVD Printer in the United States without the appropriate
labels as required in Section 15.19 of the Rules,6 and prior to testing for compliance with Sections 15.107
and 15.109 of the Rules.7 XLNT Idea filed its response to the LOI on March 12, 2008,8 and stated that it


1 47 U.S.C. § 302a(b).
2 47 C.F.R. § 2.803(a).
3 XLNT Idea, Inc., Notice of Apparent Liability for Forfeiture, 23 FCC Rcd 16417 (Enf. Bur., Spectrum Enf. Div.
2008) (“NAL”).
4See Letter from Chalapathi R. Atluri, CEO, XLNT Idea, Inc., to the Spectrum Enforcement Division, Enforcement
Bureau, Federal Communications Commission (December 3, 2008) (“NAL Response”).
5 See Letter from Kathryn S. Berthot, Chief, Spectrum Enforcement Division, Enforcement Bureau, Federal
Communications Commission to XLNT Idea, Inc. (February 11, 2008).
6 47 C.F.R. § 15.19.
7 47 C.F.R. §§ 15.107, 15.109.

Federal Communications Commission

DA 09-2545

manufactures the Nexis 100AP AutoPrinter, the Nexis 100AP Publisher, and the Xi440 CD/DVD Printer
at its facility in San Diego, California and markets all three devices for both residential and commercial
use, and that until receipt of the LOI it was unaware of the applicable FCC technical and labeling
requirements.9 XLNT Idea stated further that subsequent to receipt of the LOI, it had completed testing
of the devices, and asserted that the testing demonstrates that it has satisfied the Declaration of
Conformity requirements for these devices.10
4.
On November 4, 2008, the Division released a NAL finding that XLNT Idea marketed the
Nexis 100AP AutoPrinter, the Nexis 100AP Publisher, and the Xi440 CD/DVD Printer in the United
States prior to authorization.11 We noted that the Nexis 100AP AutoPrinter and the Nexis 100AP
Publisher are identical except that the Nexis 100AP Publisher can burn cds and dvds; therefore, testing
and authorization of the Nexis 100AP Publisher is sufficient to demonstrate compliance of the Nexis
100AP AutoPrinter. Thus, the NAL found that XLNT Idea marketed two distinct unauthorized devices
prior to authorization. XLNT Idea’s marketing of each of these devices was found to be a separate
continuing violation.12 Accordingly, the Division proposed a forfeiture in the amount of $14,000 for the
apparent willful and repeated violations of Section 302(b) of the Act and Section 2.803(a) of the Rules.
5.
In its NAL Response, XLNT Idea does not dispute that it marketed and manufactured
two distinct unauthorized devices prior to authorization. Instead, it only seeks a reduction or cancellation
of the proposed forfeiture due to an inability to pay. In support of this claim, XLNT Idea asserts that its
business is funded by debt and operates with limited resources.13 XLNT explains that even after three
years and a few successful products, it is not financially able to control its manufacturing process.14
XLNT Idea also asserts that it could not afford expensive consultants to guide it through regulatory and
other legal issues. 15 XLNT Idea states that the proposed forfeiture is a heavy burden.16 To substantiate
these claims, XLNT Idea submits federal tax returns for 2006, 2007, and a financial statement for 2008.
(Continued from previous page …)


8 See Letter from Michael J. Schrier, Esquire, counsel for XLNT Idea, Inc., to Gabriel Collazo, Spectrum
Enforcement Division, Enforcement Bureau, Federal Communications Commission (March 12, 2008) (“LOI
Response”).
9 Id. at 2-3, 7-8, 12.
10 See LOI Response at 4-6, 8-10, 13-14. XLNT Idea noted that because the Nexis 100AP AutoPrinter and Nexis
100AP Publisher are identical except that the Nexis 100AP AutoPrinter cannot burn cds or dvds, it was only
necessary to test the Nexis 100AP Publisher and the tests results for the Nexis 100AP Publisher also demonstrate
compliance of the Nexis 100AP AutoPrinter. Id. at 4. The test report covering the Nexis 100AP AutoPrinter and
Nexis 100AP Publisher was dated February 28, 2008. The test report for the Xi440 CD/DVD Printer was dated
March 8, 2008.
11 NAL, 23 FCC Rcd at 16420.
12 Id., citing San Jose Navigation, Inc., Notice of Apparent Liability for Forfeiture, 21 FCC Rcd 2873 (2006),
forfeiture ordered, 22 FCC Rcd 1040 (2007), response pending; Samson Technologies, Inc., Notice of Apparent
Liability for Forfeiture, 19 FCC Rcd 4221, 4225 (2004), consent decree ordered, 19 FCC Rcd 24509 (2004) (both
finding that the marketing of each separate model of unauthorized equipment constitutes a separate violation).
13 NAL Response at 1.
14 Id.
15 Id.
16 Id.
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Federal Communications Commission

DA 09-2545

III. DISCUSSION

6.
The forfeiture amount proposed in this case was assessed in accordance with Section
503(b) of the Act,17 Section 1.80 of the Rules,18 and the Commission’s Forfeiture Policy Statement.19 In
assessing forfeitures, Section 503(b)(2)(E) of the Act requires that we 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.20
7.
XLNT Idea, in responding to the NAL, does not dispute that it marketed and
manufactured two distinct unauthorized devices prior to authorization, and it only seeks a reduction or
cancellation of the proposed forfeiture due to an inability to pay. We have considered XLNT Idea's
response to the NAL in light of the above statutory factors, our Rules, and the Forfeiture Policy
Statement
. We conclude that XLNT Idea willfully21 and repeatedly22 violated Section 302(b) of the Act
and Section 2.803(a) of the Rules and that no mitigating circumstances warrant cancellation or further
reduction of the proposed forfeiture amount.
8.
In analyzing financial hardship claims, the Commission generally looks to a company’s
gross revenues as a reasonable and appropriate yardstick to determine their ability to pay assessed
forfeitures.23 Indeed, the Commission has stated that if a company’s gross revenues are sufficiently large,
the fact that net losses are reported, alone, does not necessarily signify inability to pay.24


17 47 U.S.C. § 503(b).
18 47 C.F.R. § 1.80.
19 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 (1997), recon. denied, 15 FCC Rcd 303 (1999)
(“Forfeiture Policy Statement”).
20 47 U.S.C. § 503(b)(2)(E).
21 Section 312(f)(1) of the Act defines “willful” as “the conscious and deliberate commission or omission of [any]
act, irrespective of any intent to violate” the law. 47 U.S.C. § 312(f)(1). The legislative history of Section
312(f)(1) of the Act clarifies that this definition of willful applies to Sections 312 and 503(b) of the Act, H.R. REP.
No. 97-765, 51 (Conf. Rep.), and the Commission has so interpreted the terms in the Section 503(b) context. See
Southern California Broadcasting Co.,
Memorandum Opinion and Order, 6 FCC Rcd 4387, 4387-88 (1991),
recon. denied, 7 FCC Rcd 3454 (1992) (“Southern California”).
22 Section 312(f)(1) of the Act defines “repeated” as “the commission or omission of [any] act more than once or, if
such commission or omission is continuous, for more than one day.” 47 U.S.C. § 312(f)(1). See also Southern
California
, 6 FCC Rcd at 4388 (applying this definition of repeated to Sections 312 and 503(b) of the Act).
23 See PJB Communications of Virginia, Inc., Memorandum Opinion and Order, 7 FCC Rcd 2088, 2089 (1992)
(“PJB Communications”); see also Forfeiture Policy Statement, 12 FCC Rcd at 17106-07.
24 See PJB Communications, 7 FCC Rcd at 2089 (noting that information about net losses may be relevant in
assessing an inability to pay claim, but where “gross revenues are sufficiently great ... the mere fact that a business
is operating at a loss does not itself mean that it cannot afford to pay a forfeiture.”) See also Local Long Distance,
Inc
., Forfeiture Order, 15 FCC Rcd 24385, 24389 (2000), recon. denied, 16 FCC Rcd 10023, 10025 (2001);
Independent Communications, Inc., Memorandum Opinion and Order, 14 FCC Rcd 9605 (1999), recon. denied,
15 FCC Rcd 16060 (2000); Frank Neely, Forfeiture Order, 19 FCC Rcd 16135, 16135-16136 (Enf. Bur. 2007),
recon. denied, 22 FCC Rcd 1434, 1436 (Enf. Bur. 2007) (“Frank Neely”); Hoosier Broadcasting Corporation,
Forfeiture Order, 14 FCC Rcd 3356 (Consumer Info. Bur. 1999), recon. denied, 15 FCC Rcd 8640, 8641 (Enf.
Bur. 2002) (“Hoosier Broadcasting”); Side by Side, Inc., Forfeiture Order, 23 FCC Rcd 7393, 7395 (Enf. Bur.,
Spectrum Enf. Div. 2008), review pending.
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Federal Communications Commission

DA 09-2545

9.
Based on the documentation provided, we find that XLNT Idea has not demonstrated that
a reduction or cancellation of the proposed forfeiture is warranted. XLNT Idea’s financial documents for
the most recent three-year period reflect gross revenues that effectively negate the financial hardship
claim as it relates to the forfeiture amount before us. Specifically, the proposed forfeiture of $14,000
expressed as a percentage of XLNT Idea’s gross revenues is significantly less than the threshold used to
determine an inability to pay reduction.25 In this case, the forfeiture represents a percentage of XLNT
Idea’s gross revenues that falls well within the percentage range generally considered payable. As the
Commission has recognized, if a violator could escape meaningful sanctions for violations of the Rules
by seeking an inability to pay reduction that is unsupported by its gross revenues, it would be in a
position to undermine the remedial purposes of Section 503 of the Act.26
10.
As a result of our review, we conclude that that no reduction or cancellation is warranted
for an inability to pay. Accordingly, we find that XLNT Idea willfully and repeatedly violated Section
302(b) of the Act and Section 2.803(a) of the Rules and that a forfeiture in the amount of $14,000 is
appropriate.

IV. ORDERING CLAUSES

11.
Accordingly,

IT IS ORDERED

that, pursuant to Section 503(b) of the Act, and Sections
0.111, 0.311 and 1.80(f)(4) of the Rules,27 XLNT Idea, Inc.

IS LIABLE FOR A MONETARY
FORFEITURE

in the amount of fourteen thousand dollars ($14,000) for willful and repeated violation
of Section 302(b) of the Act and Section 2.803(a) of the Rules.
12.
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. XLNT Idea, Inc.
will also send electronic notification on the date said payment is made to Celia Lewis at
Celia.Lewis@fcc.gov and to Ricardo Durham at Ricardo.Durham@fcc.gov.


25 See, e.g., PJB Communications, 7 FCC Rcd at 2089 (forfeiture not deemed excessive where it represented
approximately 2.02 percent of the violator’s gross revenues); Hoosier Broadcasting, 15 FCC Rcd at 8641
(forfeiture not deemed excessive where it represented approximately 7.6 percent of the violator’s gross revenues).
26 See, e.g., Frank Neely, 22 FCC Rcd at 1435.
27 47 C.F.R. §§ 0.111, 0.311, 1.80(f)(4).
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Federal Communications Commission

DA 09-2545

13.

IT IS FURTHER ORDERED

that a copy of this Order shall be sent by first class mail
and certified mail return receipt requested to Chalapathi Rao Atluri, Chief Executive Officer, XLNT Idea,
Inc., 6262 Ferris Sq., San Diego, CA 92121.
FEDERAL COMMUNICATIONS COMMISSION
Kathryn S. Berthot
Chief, Spectrum Enforcement Division
Enforcement Bureau
5

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