A three judge panel of the United States Court of Appeals for the Federal Circuit on Tuesday denied a request by The Acushnet Company, the golf business of Fortune Brands, Inc., to stay a previously-granted permanent injunction to stop sales of infringing Titleist Pro V1 golf balls. Acushnet Company said it will move forward with the appeals process following denial of its request, while Callaway noted that two courts have now validated the injunction against infringing Pro V1 golf balls, effective Jan. 1, 2009.


Acushnet does not expect Tuesday's ruling or the injunction, scheduled to take effect Jan. 1, 2009, to have a material adverse impact on its results and reaffirmed its confidence that it will ultimately win its appeal of the verdict in the underlying patent dispute.


“This decision will not interfere with Titleist’s ability to continue to manufacture, distribute and sell Pro V1 golf balls,” said Joe Nauman, executive vice president, corporate and legal of Acushnet. “While the stay was not granted, we understand that it was a request for extraordinary relief based upon a limited review.”


“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,” said Steve McCracken, Senior Executive Vice President, Chief Administrative Officer, Callaway Golf.


Callaway Golf said it first prevailed against Acushnet in the pending patent litigation when it won a jury verdict in December 2007. In that preceding it was determined that Acushnet had infringed multiple valid claims in several U.S. golf ball patents owned by Callaway Golf.

 

Following the verdict, Callaway Golf sought an injunction against the infringing Pro V1 models, and Acushnet sought a new trial. In November 2008, the trial court denied Acushnet’s motion and granted the injunction, to be effective Jan. 1, 2009. In denying Acushnet’s motion to stay the injunction, the Court of Appeals ruled that Acushnet had neither shown that the balance of hardships tipped in its favor nor that it had shown a substantial likelihood of success on the merits in its ultimate appeal.


Acushnet said in September, the production of existing Pro V1 model golf balls was converted to be outside the patents in question. As of Jan. 1, 2009, 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,” continued Nauman. “However, Acushnet is prepared to accept returns of non-converted retail inventory if requested by retailers.”


On Nov. 10, 2008, the U.S. District Court in Delaware granted Callaway Golf’s request for an injunction in a dispute with respect to four Callaway patents and Acushnet’s Titleist Pro V1 golf balls.

 

Acushnet strongly disagreed with the judge’s ruling and filed an appeal on Nov. 19, 2008, to seek relief from the injunction, and to appeal the district court actions and other of the court’s decisions. Although the stay was not granted, the Appeals Court will next review these complex issues in far greater detail and will likely render a decision sometime late in 2009.


“We firmly believe in our position and will continue to defend ourselves vigorously in the appeal process,” Nauman added. “We expect to prevail in having all claims of all four patents at issue determined to be invalid once the appeal is fully briefed and argued. 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.”