ServiceCentral Technologies, Inc. - Growth Through Acquisition

Growth Through Acquisition. Service Central.jpg

In this episode, Trusted Counsel’s Evelyn Ashley and John Monahon spoke to Steve Teel, President and CEO of ServiceCentral Technologies, Inc. ServiceCentral was founded in 1991 and is a private company headquartered in Atlanta, GA. The company provides web-based reverse logistics, service and repair management software solutions to companies to transform the after-sales service of product into a profit stream. ServiceCentral has gone through two acquisitions; the first in 2005, the second in 2017. As a result, their employee base has grown by 30% and the company has increased revenue by 50% (some of which is attributed to the joint venture opportunities their software enabled).   

Steve has been in the IT business for approximately 25 years starting his career as a software developer. He joined ServiceCentral in early 2000’s. In the years leading up to the second acquisition in 2017, he made the strategic decision to focus mainly on making the customer experience side of service management more efficient. The factors weighing on his decision were marketplace changes, industry consolidation, and the desire to keep fickle customers loyal to the business. At work, the topic of discussion became building new applications in-house versus a business acquisition. Steve said, “these meetings got us to the idea that we could acquire Brickwire (whom they had a relationship with) and their technology platform could propel us into this service area where we wanted to improve for our customers versus building it in-house.” 

It's been a year since ServiceCentral’s acquisition of Brickwire and Steve told us that the acquisition has been beyond their best-case scenario. There’s good cultural fit between both teams and they work very well together. In addition, the products are complimentary of each other and do extremely well in the marketplace. The acquisition has allowed ServiceCentral to gain better awareness in the marketplace, and now the new team is working closely on the concept of providing the customer end to end service management solution that they call “service network.” Steve said, “we’re getting a lot of traction in the industry that I didn’t think we would’ve had, had we not done the deal.”

During the course of the podcast, CEOs, business owners, and C-level executives will learn:

  • How ServiceCentral found the businesses it decided to acquire

  • The proactive steps that ServiceCentral took to address cultural differences post-acquisition

  • Questions every founder and or CEO needs to ask prior to considering an acquisition

  • Sage wisdom to listeners considering an acquisition

  • Where Steve sees ServiceCentral going in the next few years

Don’t miss a single episode of our podcast show. Subscribe to our show “In Process Podcast” on iTunes and now on Google Play to receive this episode as well as future episodes to your smartphone.

Growth Through Acquisition

 “After our first successful acquisition we more than doubled the size of our organization in less than two years.”

“After our first successful acquisition we more than doubled the size of our organization in less than two years.”

A key component of Accusoft’s strategy for growth has been through acquisition. In this episode, Trusted Counsel’s Evelyn Ashley and John Monahon spoke to Jack Berlin, CEO of Accusoft. Accusoft is a leading document and imaging software company based in Tampa, Florida. Founded in 1991 as Pegasus Imaging Corporation, it’s a privately held company that has grown to approximately 160 employees. The company has gone through several acquisitions and now provides a wide array of technology solutions to developers worldwide. 

Looking back, the early days for Accusoft, were tough. In fact, two of Jack’s four business partners were gone within the first 18 months of founding the company. When the business plan nearly failed, the company had to reconsider the big picture. In order to stay afloat, it was decided to embark on the acquisition path. Along the way, the brand was reinvented several times, the service side was dissolved and a focus on technology became the number one priority. Jack said, “…by combining into a larger entity we would have more market clout, build a better business and a faster growing business, and lastly a more profitable business under the same roof.” Since their first transaction in 1997, Accusoft has completed multiple acquisitions.

“Out of all of the acquisitions that we did, the 2004 acquisition of TMSSequoia was one of the scariest things I ever did in my life, but in retrospect, it was one of the smartest things I did,” Jack said. His team knew it would be a smart deal. At the time, TMSSequoia was a public company and its history can be summed up as a merger gone bad. It had gone through five presidents in six years and was poorly managed, hence the negotiations for Accusoft were fairly easy. The transaction created major customer extension opportunities and access to top engineers for the company – and made Jack and his executive team understand the value and importance of growth through acquisition.  

This was a terrific discussion as Jack walked us through each and every acquisition. During the course of the podcast, CEOs, business owners, and C-level executives will learn:

  • The acquisition challenges that Accusoft faced

  • Lessons learned from three deals that actually never closed

  • Accusoft’s strategy for finding businesses to acquire

  • Accusoft’s communication strategy regarding employee change management

Don’t miss a single episode of our podcast show. Subscribe to our show “In Process Podcast” on iTunes and now on Google Play to receive this episode as well as future episodes to your smartphone.

How I Did It: I Bought a Failing Business and Turned it Around in 60 Days

 “My partner and I bought a software business and we took it apart. We were set out to turn this warhorse into a systems house.”

“My partner and I bought a software business and we took it apart. We were set out to turn this warhorse into a systems house.”

In this episode, Trusted Counsel’s Evelyn Ashley and John Monahon speak to Senior Counsel, Tom Wardell who joined the firm in early 2018. If you missed the press release on Tom’s joining Trusted Counsel, you can read it here. Additionally, Tom was president and CEO of Versyss from 1988 to 1993. Versyss was a provider of computer systems for small businesses and based in Boston and Los Angeles. It was the largest provider in the United States for the physician practice and credit union industries and one of the top-three providers for the construction and building-supply industry. Tom’s experience with buying and selling Versyss gives him unique insight and practical understanding of our clients’ businesses and the operating problems and issues they face. We’re pleased to share with you our in-depth interview with Tom Wardell.

According to Tom, he and his business partner David knew what they were getting into when they bought Versyss. They had a good sense of where the mistakes were and what the problems were. Upon takeover, they immediately set out to get rid of expensive R&D projects. Next, they tightened operations which meant eliminated various projects and there were necessary layoffs. Lastly, they decided to set the foundation for a larger concept that entailed positioning the company as a “systems integrator.” They managed to turn the business around in 60 days in terms of having it run in the black, and therefore, generating cash that they could use for operations.

Absolutely critical during the process was having a strong executive team. Tom said “You wind up needing people who first of all buy into your vision. Secondly, you need to know how to assign responsibility and hold people accountable without pushing or scaring them.” The business success can also be contributed to managers who created a strong team.

Tom ultimately sold the business because a true systems integration business required an engineering/programming creating thinking group that was different than what the company was at the time. Secondly, his business partner became very unwell.  Based on his partner’s illness, Tom thought it best to sell the business instead of continuing this entrepreneur undertaking.      

During the course of the podcast, CEOs, business owners, and C-level executives will learn:

  • The biggest challenges Tom faced when he bought the business

  • What prompted him to start wearing bow ties (it started when he bought the business!)

  • How he got the business out of the black in 60 days

  • Advice for CEOs or first-time entrepreneurs looking to sell a business

To learn more about the steps that you should be taking inside your business now to make it more attractive for a successful sale visit our dedicated website www.preppingtheprincess.com. Also, be sure to check out our new e-book titled Prepping the Princess: Is Your Business Ready to Sell? Download the e-book here. The e-book is compiled of a collection of conversations recorded over the course of 2018 as a podcast series on our podcast show called “In Process: Conversations About Business in the 21st Century.” The show is hosted by Evelyn Ashley and John Monahon of Trusted Counsel. The e-book is designed to give the enterprising business owner an idea of how to prepare for an exit, even if that transaction is years away from fruition.

Don’t miss a single episode of our podcast show. Subscribe to our show “In Process Podcast” on iTunes and now on Google Play to receive this episode as well as future episodes to your smartphone.

New Podcast Series: Episode 3

Susan Grossinger and Rainlight

In this episode, the third of a new series titled “Pithy Conversations with CEOs,” Trusted Counsel’s Evelyn Ashley and John Monahon speak to Susan Grossinger of Rainlight, a boutique product design studio in London and Los Angeles. Rainlight’s talented team of industrial designers create products in all areas of architecture and design that include,; carpeting, furniture, and very technical curtain wall systems. In other words, anything that touches the architecture or interiors of a building is within Rainlight’s realm. Susan explained to us during the interview, “We’re part lab, part workshop and part studio.” 

Never in a million years did Susan believe that she’d have a career in running a product design company, but she says it’s great as she finds objects and products fascinating. She has a great quote that says, “Product is about the individual and their interaction with an object. It is the most personal of the design disciplines. Whether it’s your eyeglasses, the chair you sit in, or your steering wheel, we have a visceral interaction with design that affects our day-to-day life. The opportunity that makes experience extraordinary is itself an exceptional experience.”

When we asked Susan what sets Rainlight apart from their competition, she was quick to reply. For Rainlight, it’s about taking the approach of business consulting. They consult their clients every step of the way and takes pride in being their clients’ confidant. Rainlight works alongside their clients to look at the broader picture in helping them be successful in the marketplace. For example, Rainlight will review renderings of newly designed products and explain to the client that the products are meant to pair the brand identity with the design of the client’s space. That branding is not simply a new logo of a website, the space and objects are crucial elements of the brand experience for their client’s customers. The discussion could segue to reviewing an element of the client’s marketing strategy and that’s exactly’s Rainlight’s approach, business consulting. At the end of the day, however, Susan reminded us that it’s about the products and making them work in the designated spaces.  

Susan was recently honored by the International Interior Design Association (IIDA) with a lifetime membership. She is a three-time judge of the Product Innovation Awards. When she’s not working she’s active in environmental and animal rights non-profits and has served on the Board of Directors for Heal the Bay in Santa, Monica, California for more than 15 years.

During the course of the podcast, CEOs, business owners, and C-level executives will learn:

  • About Susan and her background (which is not in architecture nor design)

  • Rainlight’s approach to working with clients in terms of “the process” for product design

  • Susan’s biggest challenge with running the business

  • Rainlight’s business priority of the year

  • Susan’s words of wisdom for show listeners

Don’t miss a single episode of our podcast show. Subscribe to our show “In Process Podcast” on iTunes and now on Google Play to receive this episode as well as future episodes to your smartphone.

Trade Dress

In addition to trademarks, trade dress is another way for a company to protect its reputation. While a trademark addresses the company’s brand, the trade dress refers to the characteristics of the visual appearance of a product or the product’s packaging. Many companies use distinctive packaging to distinguish their product from their competitor’s. Frequently, consumers can identify a product simply by looking at a silhouette of the box. Similarly, trade dress can be utilized to protect a building design associated with sales of a particular brand, such as a restaurant or a retail store.

One of the simplest ways to present a product to the consumer is to put it in a generic box with a logo and/or the product image. In this case, the marks used may be distinctive, and therefore protected, but the packaging of the product is generic and does not serve to distinguish the product in the eyes of the consumer. A more sophisticated strategy is designing a box of a specific shape and/or type of material. The trademarks would likely still be on the package, so the consumer could very easily ascertain what they were purchasing. The box itself would also be distinctive and therefore protectable as trade dress. This unique packaging may elicit a certain feeling in the consumer, thereby attracting them to the product and/or making it much easier to spot the particular brand on a shelf of competing products.

In the United States, the legal support for protecting trade dress is found in the Lanham Act. “Any person who, on or in connection with any goods or services, or any container for goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which (A) is likely to cause confusion … as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities … shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.” 15 U.S.C. § 1125(a) (2016). According to the Trademark Manual of Examining Procedure (TMEP), § 1202.02 defines a trade dress as a “symbol” or ‘device’ within the meaning of § 2 of the Trademark Act.” (2017). The TMEP goes on to say that, although trade dress originally only referred to the packaging or “dressing” of a particular product, it now has been expanded to also include the design of the product.

Courts in the United States have defined trade dress as a product’s “total image” or “overall appearance” and “may include features such as size, shape, color or color combinations, texture, graphics or even certain sales techniques.” John H. Harland Co. v. Clarke Checks, Inc., 771 F.2d 966, 980 (11th Cir. 1983). Of course, the shape of the product itself comprises the total image, but the product’s packaging or presentation is also part of the total image.

An example of packaging that is protected by trade dress is the Coca-Cola™ bottle. The Coca-Cola™ bottle has a distinctive shape. A beverage can be sold in any type of bottle, so the contours of the bottle are not functional. Without the logo, a consumer can still easily recognize the bottle shape as being associated with Coca-Cola™. Because Coca-Cola™ has obtained trade dress protection on the bottle, no other beverages may be sold using that bottle shape.

 Trade Dress protection on bottle

Trade Dress protection on bottle

 Building design protected by Trade Dress

Building design protected by Trade Dress

An example of a building that is protected by trade dress is the design adopted by restaurant Taco Cabana™. In fact, the case Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763 (1992) established trade dress protection in the United States. In this case, the Supreme Court of the United States held that trade dress is inherently distinctive under the law. The Court held that a trade dress, “remain(s) inherently capable of distinguishing the goods of the users of these marks.” Two Pesos, 505 U.S. at 772.

The Ride™, an entertainment company offering tours in New York City, obtained trade dress protection in the United States, as well as other countries, for the exterior view of their tour bus. The United States Trademark number for the trade dress is 5,367,214, and the image of the trade dress appears below. As the image shows, the people on the bus are part of the trade dress – when people on the sidewalk see a bus that has passengers facing the sidewalk, this is an indication that the bus is associated with The Ride™. The trade dress registration can be examined in more detail at The United States Patent and Trace Mark Office.

 Trade dress protection on buses

Trade dress protection on buses

To register a trade dress with the United States Patent and Trademark Office, the requirements are the same as they are for a trademark: the trade dress must be distinctive and non-functional. The process required to register a trade dress is the same as the process required to register a trademark, and the examination standards are the same. If a trade dress is not registered, regional protection may be proven in court if the plaintiff is able to show that the trade dress has acquired secondary meaning in the eyes of the consumer. Registering a trade dress, however, provides national protection without the necessity of showing secondary meaning.

Another aspect of trade dress is the potential confusion with design patents.. Trade dress and design patent are actually just various ways to protect a design - it is possible for a particular design to be protected by both a trade dress and a design patent. As described above, because trade dress falls under trademark, a trade dress may not be functional. Accordingly, “if a feature of the trade dress is ‘essential to the use or purpose of the article or if it affects the cost or quality of the article,’” the feature may not be part of a protected trade dress. (TMEP § 1202.02(a), citing Qualitex Co. v. Jacobson Prods. Co., 514 U.S. 159, 165 (1995). Similarly, a design patent is available for a new, original, and ornamental design for an article of manufacture. 35 U.S.C. § 171. If a company has obtained a design patent on a design, the design patent provides support for the argument that the design is ornamental, or non-functional. Accordingly, the existence of a design patent may be used as evidence that the design may be registered as a trade dress. TMEP § 1202.02(a)(v)(A) (2017).[1]

A significant investment to develop unique packaging = significant benefits. A distinctive trade dress may elevate the brand in the market thereby increasing sales and/or allowing the company to increase price . A distinctive trade dress may also make it easier to distinguish a commodity from a similar product sold by a competitor, thereby allowing a company to build brand loyalty in an otherwise competitive market. Accordingly, developing a trade dress is an important strategy for the modern sophisticated business. If the company takes the time and resources to develop the trade dress, it is a simple matter of protecting the trade dress under modern trademark law.

If you have any questions or comments regarding trade dress, please contact Tammy Tanner, Attorney at Trusted Counsel, Atlanta, Georgia (ttanner@trusted-counsel.com). Tammy Tanner has a strong background in intellectual property and technology transactions. She advises clients on structuring strategy, implementation and management of intellectual property legal issues (domestic and international) as well as brand protection, including building creative protection. Tammy graduated from Jacksonville University with a B.S. in applied mathematics and obtained her J.D. from Emory University in Atlanta, Georgia.

About Trusted Counsel

Trusted Counsel (Ashley), LLC provides seasoned, practical and confidential legal services for businesses. Based in Atlanta, this corporate and intellectual property law firm is dedicated to serving the unique needs of companies, investors and legal departments. Trusted Counsel’s attorneys make a difference. Their focus is to guide and empower clients with exceptional legal counsel, knowledge and tools that lead to practical, informed business decisions. Trusted Counsel’s Managing Partner Evelyn Ashley and Partner John Monahon co-host “In Process: Conversations about Business in the 21st Century,” a podcast where national guests are interviewed on emerging business trends, ideas and techniques. Visit trusted-counsel.com for more information.

[1] The reasons for obtaining both trade dress protection and design patent protection on a design are partially economic in nature. Some of the value of a brand lies in the development of the intellectual property protecting the brand. Accordingly, the more types of intellectual property registered to protect a design, the more valuable the design. Additionally, obtaining various types of intellectual property may provide additional leverage against potential infringers of the product.