Acushnet Company and Callaway Golf Company have been engaged inlitigation over golf ball patents that finally settled in April. The fight both depleted shareholders’ earnings and diverted management’s focus and was a colossal waste.
After the seven year patent battle things are basically the same. Acushnet’s Titleist brand is still number one by a wide margin and Callaway is no closer to catching them than before. However it’s reasonable to presume several lawyers made alot of money.
Why did this argument over golf ballpatents start in the first place? It finished with the sides agreeing to allow manufacture of balls under the others patents. Alot of sound and fury with apparently no concrete result so maybe a review of the significant events would be worthwhile.
2000 – Acushnet Golf revolutionizes the ballbusiness with the multi-layer urethane cover Titleist Pro V1 that almost over night becomes the most played ballon thePGATour and number one selling ballby a wide margin. Callaway enters the ballmarket for the first time.
2001 and 2003 – Spalding Golf, at the time the number two ballcompany, is issued four patents covering multi-layer golf ballmanufacturing.
2003 – Spalding goes bankrupt and the assets, including the four patents in question, are purchased by Callaway Golf. (Note: In April2012 Spalding’sleading brand, Top-Flite was sold to Dick’s Sporting Goods as part of Callaway’s global restructuring lead by new CEO Chip Brewer, on the job one month afterleaving Adams Golf.)
January 2006 – Seven U.S. Patent and Trademark Office examiners agree the Spalding patents are invalid. This ruling is prior to Callaway’s firstlaw suit against Acushnet.
February 2006 – Callaway sues Acushnet saying the marketleading Titleist Pro V1 infringes on the Spalding patents. During the trialthe judge rules Acushnet may not revealthe four Spalding patents are invalid according to the U.S. Patent & Trademark Office. The case is decided in December 2007 when a jury (stillnot knowing about the invalid patents) says Acushnet is at fault but Acushnet wins the right to have a new trial.
November 2008 – A U.S. District Court grants Callaway an injunction and judgment causing Acushnet to stop manufacturing the then current version of the Titleist Pro V1. Acushnet complies by pulling Pro V1s off golf shop shelves and rushes a version to market that does not violate the patents.
August 2009 – A U.S. Court of Appeals three judge panelgrants Acushnet a new trialand also overturns the 2008 judgment and injunction favoring Callaway that prohibited manufacture and sale of the Pro V1 ball. Specifically the ruling says Acushnet can use as part of its defense the 2006 Patent Office finding the Spalding patents are invalid.
March 2010 – In the second trialin U.S. District CourtDelaware, a jury decides Callaway has no case against Acushnet for patent infringement and the four patents are invalid.
March 2011 – the Board of Patent Appeals again says the Callaway patents are invalid but Callaway says they willappeal.
April2011 – The U.S. District Court for the District of Delaware in a finaljudgment rules for Acushnet and against Callaway saying there was no patent infringement because the Board of Patent Appeals had reiterated a month earlier the four patents were invalid. Further the judge officially closes the case, saying Callaway would not be allowed a new trialthough an appealis possible by Callaway in the FederalCircuit Court.
April2012 – Acushnet and Callaway come to an agreement allowing each to make balls and club products under the other’s patents without any monetary settlement being paid by either company.
Well, at least this resource wasting episode is over and Callaway willhave to compete with Acushnet’s Titleist Pro V1 the old fashion way…with a better product.WHAT'S YOUR REACTION?