Acushnet Appeal Denied

2008-12-29

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By Steve Pike

A three judge panel of the U.S. Federal Circuit on Dec. 23 denied a request by the Acushnet Company (Titleist, FootJoy, Cobra) to stay a previously-granted permanent injunction won received by Callaway Golf Co. (NYSE: ELY) to stop sales of Titleist Pro V1 golf balls Callaway believes infringes on four of its golf ball patents. The injunction is effective January 1, 2009.

On the surface, the denial of Acushnet’s appeal appears to mean that all Titleist Pro V1 and Pro V1x golf balls - at least those made prior to September 2008 when Acushnet modified its manufacturing – would have to be pulled from shelves. But in a statement released following the ruling, Acushnet said  there will be “limited amounts’’ of non-converted Pro V1 golf balls in retail inventory.

“Acushnet does not believe that the injunction order requires Acushnet to recall any Pro V1 golf balls from retailers, or that retailers are required to return any golf balls to Acushnet,” said Joe Nauman, executive vice president, corporate and legal for Acushnet. “However, Acushnet is prepared to accept returns of non-converted retail inventory if requested by retailers.

"This decision will not interfere with Titleist’s ability to continue to manufacture, distribute and sell Pro V1 golf balls.”

The Acushnet Co. is expected to begin shipping a new generation of Titleist Pro V1 and Pro V1x balls in the first quarter of next year.

Nauman said Acushnet will move forward with the appeals process.

“While the stay was not granted, we understand that it was a request for extraordinary relief based upon a limited review,’’ Nauman said.

Nauman did not define the “limited amount’’ or why only a limited amount of the non-converted balls will be in the retail inventory.

With victories in the U.S. District Court and the Federal Circuit, Steve McCracken, senior executive vice president and chief administrative officer for Callaway Golf, called on the Acushnet Co. to end its fight.

“Callaway Golf believes it is time for Acushnet to accept its losses in court and get on with the task of helping retailers clean up their inventories over the next week,” McCracken said, apparently meaning Callaway expects Acushnet to be proactive in getting all non-converted Pro V1 and Pro V1x product out of the marketplace by Jan. 1.

No doubt McCracken and Callaway will keep a close eye on the shelves as this battle – barring a settlement - promises to continue deep into 2009.