Really mad.
On December 14th, 2007, Callaway Golf won a patent infringement suit against Acushnet, the maker of the renowned Titleist Pro V1 line of golf balls. Does this kind of stuff ever happen between two of the largest names in golf? Generally companies of this magnitude go after makers of knock-off clubs and bogus balls and settle quietly out of court. In this case, jurors found Acushnet guilty of infringement on 4 of 5 (I've also heard 8 out of 9) of Callaway's golf ball patents. I thought that was pretty interesting considering how long Titleist has been in the business of making balls. You can read a little more about that in our Golf Equipment forum. At the time I really wasn't sure what this meant for either company...until today.
While randomly surfing some days ago I came across amazing information thanks to Dave Dawsey, otherwise known as "The IP Golf Guy". Callaway golf has filed a motion for a permanent injunction. That's fancy legal-speak for seeking to totally halt the production, sale and distribution of the Pro V1. The motion itself is a challenging read, but the information contained within is incredibly intriguing, and Callaway makes a very compelling case for itself. The link to the redacted brief is here:
http://golf-patents.com/files/22847-21779/20080116_callaway_motion_for_injunction___redacted_version_of_brief_in_support.pdf
In the brief, Callaway states many interesting things. According to the brief, Callaway Golf spent hundreds of millions of dollars to develop its own golf ball business from the ground up. The result was the Callaway Rule 35 golf ball, which according to the company was a great success in the market and played by many elite professional golfers. They claim that the success of the ball was undercut by Acushnet with the release of their infringing Pro V1 line of balls. Apparently tour players gave back troubling input regarding Acushnet (Titleist) and threatened to switch from their wound balls to something else. This happened after Acushnet studied the Rule 35 and other similar balls. The response to negative feedback was the release of the Pro V1, and what this did was it enabled Acushnet to retain the huge amount of players signed under contract with Titleist and "dilute the competitive advantages of competitive balls that might have otherwise induced Titleist users to switch." Callaway recognizes that "while an injunction cannot change history…an injunction will give Callaway Golf a meaningful opportunity to secure a share of the market of the sort it would have had, and should have had, absent Acushnet's infringement."
Check out these two portions of Callaway's proposed order:
"Acushnet’s professional golfers currently under contract are permitted to play ProV1 products through the end of the 2008 calendar year. However, in addition to the notice required below in paragraph 4, Acushnet shall notify in writing all professional golfers affiliated with Acushnet that ProV1 products will no longer be available after December 31, 2008."
"Distributors and retailers of Acushnet’s products, and Acushnet customers may dispose of remaining ProV1 product inventory in their physical possession by sale or otherwise, but Acushnet shall not further supply any distributors, retailers and/or customers with ProV1 products as of the date of this Order."
Oh boy.
Callaway then systematically begins to outline and highlight how Acushnet's use of Callaway's patents-in-suit have caused the company damage by using Acushnet's own graphs, charts, and statements made in the previous patent suit that was decided on December 14th. In a press release issued shortly after the suit was filed, Callaway states that Acushnet tried to "create the impression that it had developed the Pro V1 before the filing of the patents in suit." The statement issued by Acushnet says, "Acushnet received it's first patent covering this technology on March 3, 1999. The oldest of the Callaway patents being asserted was not filed until December 12, 1999 and issued on March 15, 2001." Continuing on with the brief, Callaway states, "This statement (Acushnet's) creates the impression that the Pro V1 and the first Acushnet patent covering it came before the Sullivan (Callaway) inventions protected by the patents-in-suit - an assertion that Acushnet knows to be false. Acushnet never disputed that the patents-in-suit had effective filing dates no later than 1995 and, both in the pretrial order and during trial, conceded that the effective filing date for Callaway Golf's patent applications was 1995 - long before the 1997 filing date for the first Acushnet patent relating to the Pro V1."
The brief states that Acushnet continued to publicize this misleading statement in other public statements made after the trial. Reading the table of contents alone will give you an idea as to how solid of an argument Callaway makes:
- The infringing Pro V1 continues to Callaway Golf of marketing opportunities, intangible benefits, and sales of golf-related products
- Acushnet's other tactics irreparably harm Callaway Golf's image and reputation.
- The patented technology substantially encompasses the Pro V1, rather than being merely a minor component of the infringing product.
As if all of this weren't enough, Callaway even goes on to explain how the public interest will not be harmed by a permanent injunction by saying that the removal of the Pro V1 "will in no way deprive the public…of the convenience of a ready supply of high performance golf balls, or even three-piece urethane-over-ionomer golf balls. Once the Pro V1 is enjoined, there is nothing to suggest that the standard market forces along with the collective efforts of Callaway Golf and other manufacturers of premium polyurethane-covered multi-layered golf balls such as Bridgestone, Srixon, TaylorMade and Nike would be unable to fulfill the demand previously met by the infringing Titlist balls."
Yes, you read that correctly…Callaway just mentioned the names of competitors that could gain more market share than they currently have if the Pro V1 didn't exist. If you think Bridgestone, Srixon, TaylorMade and Nike don't or wouldn't agree, you may just be nuts. This is just the beginning of some very interesting things in the world of golf.