FUNCTION CODE 56 UPDATE: Airline Sourcing is OK; but PAH Trace Must be Established

Recent confusion about the use of function code 56 has caused some consternation in the industry.  The focus of this issue has been on parts obtained from air carriers (which represents a significant portion of the industry’s surplus parts).

The issue arose from an FAA email that incorrectly stated that articles obtained from an air carrier were ineligible for 8130-3.  This was not a correct statement, and the FAA is planning to issue a follow-up email to correct this statement.

Our FAA contacts says that they have seen at least one case where Limited DAR-F’s are issuing 8130-3 tags for parts that were not traceable to a PAH in accordance with the criteria FAA established in the DAR 56 policy memo of October 14, 2016.  The FAA reports that a function code 56 designee had issued tags based solely on paperwork from an airline, in the absence of paperwork or markings from the PAH. While some DAR function codes permit reliance on air carrier evidence (e.g. to identify new surplus parts), function code 56 does not permit that to be the sole basis of an airworthiness decision.

Recently the FAA sent an email to the entire Limited DAR-F community to warn them about this issue.  The intent of the email was to make it clear that the paperwork or the physical part markings had to be traceable to a PAH in order to issue an 8130-3 tag under DAR function code 56.

The recent emailed guidance suggested that function code 56 does not allow 8130-3 tags for articles from Part 121 air carriers.  This description was not an accurate portrayal of FAA policy, because the statement was truncated.  We have discussed this matter with Scott Geddie, who heads up designee policy for the FAA, and he confirmed that the correct statement should have looked like this:

This program DOES NOT allow issuance of an 8130-3 tag for:

….

  • Parts or articles obtained from an FAA Part 121 air carrier, unless proper documentation exists from the PAH or there are part markings traceable to the PAH

The italicized text (above) was not in the original FAA email, but the FAA has pledged to send a follow-up email with the italicized text, and has confirmed that italicized text represents the intent of the FAA.

For comparison purposes, the original October 14, 2016 policy memo makes the function code 56 requirements very clear.  To issue an 8130-3 under function code 56, you need one of the following:

  1. Certificate of Conformity/Statement of Conformity from a Production Approval Holder (PAH); or
  2. Certificate of Conformity/Statement of Conformity or shipping document from a PAH supplier with verification of direct ship authorization; or
  3. Part Markings made under 14 C.F.R. § 45.15.

If you have other evidence of airworthiness (like valid air carrier trace), then an 8130-3 may still be issued – but it must be issued by a DAR with a different function code.

Is A Counterfeit Part an Unapproved Part?

A member recently  asked me whether a “counterfeit part” is by definition an “unapproved part.”

In the US, there is support for this statement in the FAA’s Advisory Circular AC 21-29C, which specifically defines the term “unapproved part” to include counterfeit parts in paragraph 3(p):

p. Unapproved Part. A part that does not meet the requirements of an approved part (refer to definition of approved parts in subparagraph 3b). This term also includes parts that may fall under one or more of the following categories:

(1) Parts shipped directly to the user by a manufacturer, supplier, or distributor, where the parts were not produced under the authority of (and in accordance with) an FAA production approval for the part (e.g., production overruns where the parts did not pass through an approved quality system).

NOTE: This includes parts shipped to an end user by a PAH’s supplier who does not have direct ship authority from the PAH.

(2) New parts that have passed through a PAH’s quality system which do not conform to the approved design/data.

NOTE: Do not report parts damaged due to shipping or warranty issues as an SUP.

(3) Parts that have been intentionally misrepresented, including counterfeit parts.

The FAA is able to make this definition for several reasons: (1) the term unapproved parts is not defined in the US regulations so there is no regulatory definition or connotation that limits the FAA’s ability to define this term in any way that they want; (2) the term unapproved parts is not used in the US regulations so the FAA’s definition in an AC has no regulatory affect; (3) the definition in AC 21-29C is limited only to the AC, and does not have legal effect outside the AC; and (4) the term unapproved parts is not the opposite of approved part, and under the FAA’s definitions a part may be both unapproved and approved (this is an unfortunate result of their definitions).

You may be surprised to see me assert that a part may be both unapproved and approved, but it has actually happened!  The problem lies in the fact that the definition of “unapproved parts” includes (a) parts that do not meet the requirements of an approved part and also (b) several other categories of parts that MAY meet the requirements of an approved part.  One of those categories is counterfeit parts.

There is actually a case where an OEM accused a PMA company of counterfeiting (OK – there are many of these cases but there is at least one where the OEM was actually successful in its claim).  There were no findings that the PMA company’s parts were unairworthy.  The PMA company was required to change the part number on the part in order to remedy the infringement (actually, they were required to apply to the FAA for design changes that would lead to a part number change).  See Whittaker Corporation v. Execuair Corporation.

Although there is advisory support for the assertion that a counterfeit part is, by definition, an unapproved part, this case shows that approved parts can also be described as counterfeit in the right circumstances.  The reason for this is because counterfeit aircraft parts typically are labelled as ‘counterfeit’ because they infringe another company’s trademarks.  Thus, the FAA could approve parts because they meet the technical requirements for such parts, but if those parts are marketed under another company’s trademarks then that is counterfeiting.

Let me give you an example.  Let’s say that I decide to obtain PMA on parts for a Rolls-Royce engine.  If I am able to demonstrate through testing and other proofs that my parts meet all applicable requirements for installation in the Rolls-Royce engine then I might be eligible to obtain PMA from the FAA for the parts (don’t forget that PMA entails a compliant quality system as well as an airworthy design).  Now, anything I produce that properly conforms to the PMA is an approved part.  But if I put those parts into boxes that say Rolls-Royce on them and sell them as if they were Rolls-Royce parts, then I am counterfeiting (because I have improperly used the Rolls-Royce trademark).  So by the AC 21-29C definition my parts are also unapproved.

So who has a right to do something about it?  The FAA should not take enforcement action against me in this hypothetical scenario, because I have not violated any FAA regulation (FAR 3 does not apply because the parts are airworthy and airworthiness is a ‘safe harbor’ under FAR 3).  But Rolls Royce may have an action against me under the Lanham Act for trademark infringement (in other words, for counterfeiting).

In summary, in the limited context of FAA AC 21-29C, a “counterfeit part” is (by definition) an “unapproved part.”  But because counterfeiting charges are based on trademark infringement, and not on safety/airworthiness, it is also possible that a counterfeit part could, in fact, also be an approved part.

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