By GENE YASUDA
Deputy Editor/Business & MultimediaCallaway Golf officials are claiming a legal victory in their patent dispute with Titleist, which could result in blocking the sale of some Pro V1 balls by Jan. 1.
The U.S. District Court in Wilmington, Del., granted Nov. 10 Callaway’s request for a permanent injunction stopping sales of the current line of Pro V1 family of golf balls, according to Callaway officials.
The Titleist camp, however, immediately countered, saying it would appeal the ruling. It maintained the court’s action would “not have any impact on our ability to supply our customers with Pro V1 golf balls.”
In September, Titleist converted production of existing Pro V1 models “so that they are outside of the patents in question,” said Joe Nauman, executive vice president, corporate and legal of Acushnet Co., in a written statement. The Fairhaven, Mass.-based company owns the Titleist brand.
But it was unclear how many Pro V1s made before the conversion were still in the retail pipeline.
Titleist also is introducing its next generation of Pro V1 products in the first quarter of 2009; these balls also have been developed outside the scope of the patents in question, according to Nauman.
As a result, the injunction, even if it takes effect, is unlikely to derail the Pro V1 franchise, a juggernaut that has dominated on professional tours as well as at retail since its debut in 2000. According to research firm Golf Datatech, the Pro V1 and Pro V1x balls together accounted for 22.6 percent unit market share in September – more than all the ball models sold by any single, rival manufacturer.
Nevertheless, if Acushnet exhausts the appeals process without a favorable result, Callaway could benefit in more ways than one. A clear-cut legal victory would bolster the reputation of Callaway’s R&D capabilities, which have produced balls that are gaining popularity on pro tours. Just as important, it could impact the consumer perception of Titleist superiority.
It’s also possible Callaway might net more than intangible returns. According to an analyst report written by Tim Conder, who follows Callaway for Wachovia Capital Markets, the “rulings could force Titleist to come to a settlement – $100 million to $150 million based on a royalty applied to past Pro V1 sales – with (Callaway) sooner vs. later or wait pending a potential appeal.”
Meanwhile, the legal battle wages on.
“Callaway Golf has invested millions of dollars in research and development to create innovative products for millions of golfers around the world, and has protected those products with one of the broadest patent portfolios in golf,” Steve McCracken, Callaway’s senior executive vice president and chief administrative officer, said in a written statement. “We are very pleased with today’s decision.”
Not only will Titleist seek relief from the injunction, it intends to have the courts declare invalid the four Callaway ball patents that Callaway alleges Titleist infringed.
“We will continue to defend ourselves vigorously and we fully expect to prevail. . .” Nauman said. “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.”
• • •
Gene Yasuda is
Golfweek’s Deputy Editor/Business & Multimedia. To reach him e-mail
gyasuda@golfweek.com.
Posted: 11/11/2008
print
email
discuss
