That's my interpretation of the regs. Now, as I tell my customers, there are no transponder police, so the chance of getting in trouble either because your transponder is off or because it hasn't been checked in 17 years is pretty small, but yeah - you'd be in violation. I've inspected airplanes in which the transponder had NEVER been checked in the 25 years since the plane was given an AC, and I've talked to folks who turn their transponder off when they feel like it for various unmentioned reasons - I've never talked to anyone that's ever been written up for either reason. Not a recommendation to do it - always recommend being in compliance with the regs, even if the chance of being violated is tiny.