IP Management Case Studies

Fabulawn™ - The Final Word in Lawn Making

The following is a fictional case study designed to highlight a number of issues related to the identification and management of IP. At the end of each module, a brief summary of issues, outcomes and actions will be presented as they relate to this case study. We will also include an actual case study outlining the experiences of a number of companies that have been through the process of managing their IP.

*FABULAWN ™ - The Final Word in Lawn Making Fabulawn Company ™  first introduced its revolutionary lawn development machine to the Australian market in 2001 and has achieved astonishing growth in sales ever since. This has been much to the surprise of its detractors who thought that there was no market for a reasonably expensive, but very innovative, piece of home maintenance equipment. The FABULAWN™ range of lawn development machines was a radical introduction to the lawn mowing market in 2001. The combination of practical space mission technology and robotics based on proprietary chip technology, and a design that fully reflects the high tech nature of the product, has brought success for the FABULAWN™ Company. Using breakthrough technology The FABULAWN  ™  range consists of three machines, which provide the ability to manicure lawns with minimum human intervention (all you do is choose the desired height of the grass). All machines are solar powered, but a mains outlet provides the additional boost for operating the mowers on those less than perfect days. The three lawn robots, the Lawn Sheriff™, the Lawn Marshall™ and the Lawn Judge™ become increasingly more intelligent and offer additional functionality in their ability to core lawns, monitor lawn quality and apply fertiliser, weed killer and lawn seed as required.

Beyond traditional business thinking

The creator and developer of the FABULAWN ™  range, Ruth Walker, is currently engaged in more entrepreneurial thinking in terms of the business and where she can take the company.

While the lawn making business continues to boom, Ruth and her R&D team have been thinking about the development of their company, and are increasingly seeing their business as more than just high-tech lawn maintenance.

Ruth goes on to say, "We believe that the future of the business is not just in making high tech lawn machines but the real growth is the development and exploitation of the intellectual property. We are convinced that it can be further developed for all sorts of applications. Our core technology has enormous potential in commercial, industrial, agricultural and mining industries. I think that the IP driven business has the potential to dwarf our success in the lawn business."

The grass roots of the business

The FABULAWN™ range of high-tech lawn makers began some 15 years ago when Ruth helped pay for her industrial design degree by running a lawn mowing and garden maintenance business part-time. The many hours of 'mindless' mowing and weeding got Ruth thinking. "How hard would it be to design a robot to do most of this work".

"From there it grew to be my final year major design project," Ruth says.

After completing her degree, Ruth found difficulty in getting a suitable job and continued to build her lawn mowing business. During this time she continued to tinker with her design in the shed at the back of her parents' home.

At this stage, Ruth was thinking of a fairly simple robotic mower that might be able to trim some edges. However, talking about the project to a good friend and science graduate, Ruth began to think of a mower doing more than just mowing the lawn. Her friend, now head of R&D and part owner of the FABULAWN™ company, Jerry Smithton, told her of some scientific equipment which had been used on the Mars explorers which may add some value to her project.

Protecting a great idea

Ruth and Jerry investigated the technology and found that it could be modified to suit their purposes. Ruth and Jerry also conducted some research as to whether their modifications to the technology could be eligible for patent protection. To find out if this was the case, they engaged a patent attorney to conduct a search and to assist them to identify the owner of the original technology in order to negotiate a licencing agreement.

The attorney found that their modifications to the technology and its intended use would in all likelihood mean that it would meet the tests of novelty and inventiveness. However, they decided not to pursue patenting the technology until they had made some further refinements to it and had undertaken some additional market research. In the meantime they adopted an approach based on secrecy and confidentiality agreements with anyone (such as business advisers and manufacturers) that needed to know about their invention. There was also the need to employ contractors to undertake some of the additional developments, so Ruth drafted standard contractor agreements.

Commercialisation - taking the Lawn Sheriff™ to market

Ruth worked on developing and producing a prototype to assist in the efforts to commercialise their IP. Ruth had to investigate a number of options for manufacturing and retailing the product. The choices were to either attempt to manufacture themselves, for which they would require considerable financial backing, or to approach someone else to manufacture the Lawn Sheriff™ under licence. They decided to investigate both avenues.

The approaches to potential financiers and manufacturers were very disheartening. Ruth says, "No matter how much time and emotion I invested in approaching these people I felt that I was banging my head against a brick wall - I just wanted to give up on the whole project. We really seemed to have come to a dead end."

In desperation she turned to AusIndustry's COMET program for assistance. Not only did Ruth receive some financial assistance, but more importantly it put her into contact with another program - the Business Angel program. "This was undoubtedly our biggest break," Ruth said.

Ruth teamed up with a retired business person who had wanted to do more than just 'put his feet up'. Ruth's angel, Michael Weber, wanted to put something back into the country as well as find a good investment for his portfolio. Michael says, "I was looking for a business with great potential."

What really made this a match in heaven, apart from the finance, was Michael's understanding that IP would be a fundamental driver of this business. "Once I had signed the confidentiality agreements with Ruth, it was obvious to me that the application of this technology was virtually unlimited. The whole business strategy was centred on the commercialisation of the IP," Michael says.

IP Strategy development for business success

Once Michael was on board, they sat down and worked out a business strategy and business plan. The plan took into account the IP that they already had, and where they would need to take it in the future. Ruth says, "This was when things really started to gel for me and I had the first confirmation that perhaps there was a lot more to this than lawn development."

Now that they had a fully functioning prototype, and a well crafted business strategy and plan, they proceeded to implement the IP component of their business strategy. This included a patenting strategy, a branding strategy based on trade marks and design protection, conducting a complete IP audit, valuing all the IP that they had and also developing and implementing an IP infringement strategy.

Ruth Walker says, "Until we did all this planning, I didn't fully realise how our IP assets could drive our business. It is a time consuming task, but one that will probably give us a tremendous return on that investment."

"To give just one example of the value of that exercise, as part of the audit and developing the various sub-strategies, we made a list of the specialist advice that we would require. As a result of this we revisited our business plan and recalculated some of the figures and projections related to the cost of specialist advice. It is important to understand that you cannot successfully plan a business with textbooks alone. You need to consider all of the issues that may impact on your business specifically," says Ruth.

They had to think about how broad their strategy could be. The patenting strategy for example, involved not just patenting the innovation, but also considering other modifications that could potentially be made by competitors. The next step was to then carefully evaluate these and patent some of them to form an 'interlocking web' of patent protection, which would make it difficult and expensive for a competitor to breach.

In terms of marketing and brand building, it was important that the products had the right look to reflect their high-tech nature and create an association with innovation and quality. To enhance and protect this side of the business strategy, Ruth and the team opted for formal trade mark protection as they felt that this could avoid expensive common law litigation in any infringement proceedings in the event that a would-be competitor tried to cash-in on their innovativeness. Ruth also decided to protect the 'look' of the product with a registered design.

Considered and deliberate allocation of IP ownership

All work done by external consultants was to be covered by contracts that would clearly allocate ownership of any IP developed to FABULAWN™ Pty Ltd. Details of these contracts were entered onto the company's IP asset register.

Manufacturing under licence, good sales and planning leads to a new way of doing business

At the same time as all this work was being done, a manufacturer was contracted to tool up in preparation for the first run of the lawn makers. After a number of hiccups, the first Lawn Sheriff™ hit the market in 2001, and the rest, as they say, is history. Sales took off, first in the professional market for ground maintenance around commercial buildings and golf courses. As market share increased, FABULAWN™ decided to market a line of lower cost machines to the domestic market. FABULAWN™ now holds 25 percent of the commercial market and accounts for 60 percent of the annual sales in that market. At the upper end of the domestic market FABULAWN™ now has 20 percent market share and some 40 percent of annual sales. Ruth says "We have entered the US, European and selected Asian markets over the last couple of years via licencing agreements with a couple of big manufacturers and we are achieving similar growth rates there."

According to Ruth and Michael the phenomenal uptake by the market (which far exceeded projections contained in their original business plan) has led them to reassess the business and the direction of growth. Michael says "Ruth and I are really excited by the prospects of developing the IP side of the business. Right now we are exploring the pros and cons of becoming a pure IP development and licencing company. This is a great way to directly tap into the global markets while managing the risks associated with being a small global player. For example, we could licence our technology to a manufacturer, and as part of the licencing agreement, become equity holders in the licensor company. The possibilities of this kind of business strategy are virtually unlimited."

Ruth adds 'We are considering restructuring the business by floating the Lawn Making business while retaining the core IP in a separate company. This has considerable advantages both for business strategy and flexibility, but most importantly of maintaining very close control of the IP that we are continually developing.'

There seems little doubt that if they stick to this well planned approach to business, their potential returns are unlimited.

Click on the links below to read in detail how FABULAWN™ looks at the:

• Issues considered during the decision making process;
• Resources and adviser/s consulted; and
• Decision made as it relates to the FABULAWN™ Case Study.

Fabulawn Detailed Case Experiences

Fabulawn - Patents Fabulawn - Trademarks Fabulawn - Designs Fabulawn - Copyright Fabulawn - Circuit Layout Rights Fabulawn - Domain Names Fabulawn - Commercialising IP Fabulawn - Conducting an IP Audit Fabulawn - Business Planning Fabulawn - Financing and commercialising IP Fabulawn - Taxation and government incentives Fabulawn - The power of IP database searching