Small business vs big business - when things go wrong

Small businesses are the engine of ideas, but often they need the help of bigger businesses - as suppliers, investors or advisers. That can create a power imbalance though, which has the potential to crush a small business. Protecting yourself legally is a must - but, sometimes, even that's not enough.

Ron Mann, Managing Director of Gram Engineering.

Ron Mann, Managing Director of Gram Engineering Source: Supplied

Over his four decades in the fencing business, Ron Mann has built a multi-million dollar company, headquartered in Sydney's west. But his success belies the setbacks he's experienced - and they all relate to a fence he designed back in the 1990's.

At the time, Ron knew a major problem with existing fences was that they all had a good side, and a bad side. And everyone wanted the good side.

"Apart from marriage, the next best way of arguing is with a neighbour over a fence," he quips.

So he designed a steel fence where both sides looked the same.

"If you make it so there's nothing to argue about, there's nothing to argue about!"

Ron registered the design in 1994 and Gramline fencing went into production in 1996, with BlueScope - then known as BHP Steel - his sole supplier.

His registration meant no one could copy his design for 16 years.

"We were in business terms, printing money. Our next step was to put on an afternoon shift so we could handle the demand."
Ron Mann in his factory in western Sydney.
Ron Mann in his factory in western Sydney. Source: Supplied
But in 2002, BlueScope came out with a product that was strikingly similar. Ron says a member of their staff brought a sample to show him, "and we said that's a copy. And they said no it isn't, and we said yes it is, and they said no it isn't - and that's how the argument started."

As he lays two fencing sheets side by side - one his own design, the other BlueScope's - he explains: "the reason they had lumps on their sheet is to maintain an angle virtually the same as ours, but two millimeters wider."
Ron compares a sheet of Gramline fencing (bottom) and BlueScope fencing (top).
Ron compares a sheet of Gramline fencing (bottom) and BlueScope fencing (top). Source: Supplied

Gram Engineering vs BlueScope

With BlueScope undoubtedly the bigger player in the market, Ron says his business soon began to slide. Gram Engineering went from a yearly turnover of $35 million in 2002, to around $20 million by 2005. Plans to expand were put on hold. 

Ron says the experience left him feeling "pretty low . I mean [BlueScope] is a company I started off with."

It wasn't until 2011, that he finally drummed up the confidence to take BlueScope to court. "Everyone [had] told me you can't win," he explains.

But in 2014 he did win, with a federal court judge ruling BlueScope had indeed infringed on his design registration, and had produced and 'obvious imitation' of the Gramline fence. That ruling was upheld over an appeal and cross appeal.

"Ron, obviously a self-made man, took on the big end of town," says Geoffrey Roberson, Ron's lawyer. "The actions of [BlueScope] were quite unethical and very courageous of Ron to take them on and to beat them, as he has done."

Given Ron had originally registered his design, Geoffrey says there isn't much else he could have done to protect himself.

"It's a big problem for small business. I say with my business clients, make sure that you do document things as well as you can. You might have some form of agreement which should provide for perhaps some penalty if there is a breach of the agreement - but at the end of the day, it's a matter of monitoring the relationship closely."

The fight continues

Ron's battle isn't over yet - after spending more than $800,000 on legal fees since 2011, he's yet to see any money in compensation.

"When he tried to get an account for the profits they made, it proved extremely difficult," Geoffrey says. "Records are spread out amongst a number of entities, very difficult to pull it all together."

SBS reached out to BlueScope for comment. In an email, they said they were not in a position to discuss the case, because it was still before the courts.

In the meantime, Ron's expansion plans have remained on hold. And he no longer uses BlueScope's steel - he now purchases materials imported from Taiwan.

A loss for Aussie business, all around.

Want to find out the secret to small business success? Tune into #BizSecretsSBS at Sundays 5pm on SBS, stream on SBS Demand, or follow us on FacebookTwitter or Instagram.


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By Sana Qadar

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