Callaway and Titleist’s Legal Battle, Round 38

Short answer: you’ll still be able to buy Pro V1s this year. Don’t believe everything your buddies at the club tell you – there’s a lot of misinformation about this lawsuit. Here are some of the facts.

Recently Callaway celebrated a minor victory in their long-running legal battle with Titleist over patents related to the manufacturing process used to create Pro V1 and Pro V1x golf balls. A few weeks back, Titleist celebrated their own small victory when the U.S. Patent Office ruled the four applicable patents invalid.

Despite the now invalid patents, a Delaware judge recently granted Callaway a permanent injunction against Titleist for the sale and distribution of Pro V1 golf balls manufactured under the patents in dispute in the U.S.

However, Titleist quickly responded to point out that since September, they’d shifted their manufacturing process to a new one clear of these patents, and that production, distribution, and sale of Pro V1 and Pro V1x will not be hindered. This shift in manufacturing has been planned for quite some time and is not the result of the lawsuit. Please see paragraph two of Titleist’s official response (below) for more on that. If you were wondering whether there would be new Pro V1s in 2009, you’ll also want to read the response.

Titleist Boxes

For those deeply interested – or for those who are as confused as I am about how what are now invalid patents can be used to form an injunction – I recommend you check out David Dawsey’s in the coming weeks.

Titleist’s Official Statement

The green text below is Titleist’s official statement (emphasis added):

Fairhaven, MA (November 10, 2008) — Acushnet Company, the golf business of Fortune Brands, Inc. (NYSE: FO), announced that it will file an appeal of today’s ruling in a U.S. District Court in Delaware granting Callaway Golf’s request for an injunction in the long-running dispute with respect to four Callaway patents and Acushnet’s Titleist Pro V1 golf balls. The company also announced that it does not expect the ruling to have a material adverse impact on its results.

“We strongly disagree with the judge’s ruling and will file an appeal and seek relief from the injunction,” said Joe Nauman, executive vice president, corporate and legal of Acushnet. “However, it’s important to recognize that this ruling will not have any impact on our ability to supply our customers with Pro V1 golf balls because of the following actions which we have undertaken. In September 2008, we converted production of the existing Pro V1 models so that they are outside of the patents in question; and we have also developed and will be introducing new and improved Titleist Pro V1 products in the first quarter of 2009 that are also outside the scope of the patents in question.

“Our Pro V1 golf balls are the product of technology developed and accumulated by the Acushnet Company over the past 20 years,” Nauman continued. “Acushnet is the industry leader in developing golf ball technology and has over 650 active golf ball patents – more than any other manufacturer. Over 65 of these patents are related to the Pro V1 family.

“We will continue to defend ourselves vigorously and we fully expect to prevail in having all claims of all four patents at issue determined to be invalid in the appeal process,” Nauman added. “Our confidence is underpinned by the fact that the U.S. Patent and Trademark Office has issued final office actions which have determined these patents to be invalid.”

Update: Titleist has posted an FAQ that sums everything up.

11 thoughts on “Callaway and Titleist’s Legal Battle, Round 38”

  1. I have no doubt, based on the comments from Acushnet presented above, that Titleist has all but admitted some complicity regarding Callaway’s patent infringement claims. Regardless of outcomes, and this will continue to drag on in the appeals court, my game is not impacted whatsoever; I will continue to play the ProV1, past, current or future editions (it’s not like the Golf Ball Police will ambush me anyday soon for playing a “banned” ball).

    What is not lost is the fact that all of us will pay the price for the litigation that continues, through likely higher priced product from both companies. There will be many winners in this process, but you and I will not be amongst those listed as such.

    You can’t help but to be frustrated by it all…I just want to play golf!

  2. Ernest, just a small clarification.

    The current Pro V1 and Pro V1x golf balls are still conforming and will continue to be allowed to be played beyond January 1, 2009. They are not “banned” for play. Titleist just can’t ship or sell them.

    It is also important to note that there will not be a disruption in the sale of Pro V1s. Current Pro V1s will be available in shops from now through the end of the year and beyond. Additionally, as noted in paragraph two of Titleist’s response, they have “converted” the current Pro V1 and there is no discernible performance or quality difference. Those balls will be available in shops until the new 2009 Pro V1 and Pro V1x are available in the first quarter of 2009.

  3. The idea that there can be 650 active patents for golf balls – by one company, no less – with 65 for one specifc ball, is mind boggling.

    Think about the statement that the new balls show “no discernible difference in performance” and ask yourself why such energy (and of course, expense that is passed on to customers) is devoted to incremental new patents for the most minute of changes with no discernible change.

  4. Erik, I assume that the sale of Current Pro V1s will be available in shops from now through the end of the year and beyond, is a direct result of a pending appeal from Acushnet that permits it as such? We do know that Callaway has requested a “stop” on any sales of the current edition beyond December 31st. Would this be a fair assumption on my part to make?

  5. No, probably not, Ernest. Most of the balls in stores now are probably balls that were made in September or later. Supply chains are pretty efficient these days. Read the second paragraph in Titleist’s statement.

    Also, I don’t believe a retailer is barred from selling product even if it’s from March. The injunction, if I understand correctly, simply bars Titleist from selling the balls.

    IANAL and all that, but that’s how I read it.

  6. According to Golf Town in Canada, they are still stocking and selling supply from early 2008. Until told otherwise, their intent is to continue to sell the current stock until it either is completely sold or told by Acushnet to stop selling it. To that end, Acushnet must instruct them accordingly before this date. That is what I have been told by them (inside connections and having worked in the retail sector for over 20 years).

    In response to your statement “I don’t believe a retailer is barred from selling product even if it’s from March”. Actually, they must abide by any rulings from the courts that are considered final and resultant of a case that is closed. Failure to comply, either on their own or through instruction of the offending party, will result in legal and criminal penalties.

    My questions to you were related to a “pending” appeal from Acushnet. A court order has been released in favour of Callaway Golf. Only an accepted appeal on behalf of Acushnet can prevent the declared date of cessation of sales from taking place. All Acushnet has done is to declare a statement of dissatisfaction over a ruling, which the last I checked, is not an actual appeal itself.

  7. According to Golf Town in Canada

    This ruling applies to the U.S. only. Last I checked, we hadn’t taken over Canada. 😀

    All Acushnet has done is to declare a statement of dissatisfaction over a ruling, which the last I checked, is not an actual appeal itself.

    I would imagine that if they said they’ve filed or intend to file an appeal, they will. I would also guess that a significant portion of their appeal is based on the fact that the patents were ruled invalid.

  8. But we speak the same language! 🙂

    You have brought up a very interesting twist to this, Erik. Where does this ruling apply?

    Thank you for your input and feedback…Greatly appreciated!

  9. Unless you play ALOT of golf, like Erik-level golf, I don’t think you’d be able to tell the ProV1 from the Callaway HX line or the top of the Bridgestone or Srixon lines, either, for that matter, if you were to do a truly blind play test (which is impossible, because the dimple patterns differ…but if you could do it, I doubt 90% of us could tell the difference).

    These lawsuits to me seem silly because any special advantage a company might claim to have protected by a patent can’t really be that significant, since the performance of all these golf balls is so similar. I know they’re not silly, they’re actually very serious from a legal and business standpoint, but in some ways it’s arguing how many angels can dance on the tip of a tee.

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