South Africa: Callaway And Titleist: Finally Playing Ball

Last Updated: 7 August 2012
Article by Rowen Forster

Most Read Contributor in South Africa, September 2016

Golf equipment manufacturer, Callaway, was no doubt as delighted as South Africans were when Ernie Els unexpectedly won the 2012 British Open. That's because Els uses Callaway's HEX Black Tour golf ball. But Callaway must have been even more pleased when, in April 2012, it finally managed to settle its seemingly endless patent dispute with rival golf equipment manufacturer, Acushnet, owner of the Titleist brand.

It's safe to say that the man in the street doesn't think about patents very often, but when he does he probably thinks about the pharmaceutical industry, or possibly that other industry where companies are forever fighting about tablets, electronics, where the big players like Apple and Samsung seem to be in court all the time.  But it is, of course, possible to get a patent in something as small and, dare one say it, insignificant as a golf ball.

Patent law allows you to patent a new invention that involves an inventive step and that's capable of being applied in trade, industry or agriculture. So where does a golf ball fit into this you ask? Well, sports equipment is of course an industry in its own right, and a rather large one at that. The invention will be new if it doesn't form part of what's known as the 'state of the art' at the time when the patent's filed, and  the step will be deemed to be inventive if  is not obvious to a person skilled in the art. Although certain things are specifically excluded from patent protection - examples include a discovery, a scientific theory, a mathematical method and an aesthetic creation - there's nothing that excludes golf balls: the closest exclusion might be the one that says that you cannot patent a scheme, rule or method for playing a game, but that certainly doesn't extend to balls.

The patents in issue in this litigation were in fact registered by Spalding, but when that company went bust in 2003 Callaway bought the Top Flite golf business from the insolvent company together with the related intellectual property rights.  In 2006 Callaway sued its rival Acushnet, claiming that its Pro VI golf balls infringed Callaway's patents. A patent, which lasts for 20 years,  of course gives the owner very strong rights - the owner can exclude anyone from making, using, selling or importing the invention, so that it alone can enjoy the whole profit and advantage accruing as a result of the invention.  If a patent is infringed the owner can get an interdict, also known as an injunction in some jurisdictions, which is basically an order requiring the infringer to stop infringing the patent. The patent owner can sometimes also get an award of damages.

In December 2007 Callaway got a court order in its favour but there was plenty more to come. Acushnet filed a successful appeal, and it also successfully applied to have the patents declared invalid - attacking the validity of a patent is par for the course (pun intended) in patent litigation, and possible grounds for invalidity include the fact that the invention falls within one of the exceptions that I mentioned earlier, the fact that invention wasn't new at the time of filing, and the fact that the invention was obvious to an expert in the field at the time of filing.  Callaway then lodged a further appeal, seemingly because the damages in issue were rather significant, with quite a few Pro V1 balls having been sold.  In the meantime, Acushnet started using a different technology for the Pro V1 balls, which led to further litigation. By the time the matter was settled in April 2012, Callaway had already sold the Top Flite business and the associated intellectual property.  The terms of the settlement have been kept secret, but it's known that no money changed hands.

The golfing world isn't exactly enamoured of these developments, fearing both an adverse impact on innovation in the industry and a breakdown of the 'collegial' relations that have apparently existed in the industry. Said commentator Mike Freeman on 'What I am left to wonder now is what this trial might reveal about the state of innovation in golf. Specifically, is it possible ...that the vast open range for meaningful innovation no longer exists, that any two dogs fighting over the same bone are no different than any two golf companies searching for new technology? Of course, I also wonder how much time and effort companies now must waste navigating the patent minefield, how much one company might fear acting on an idea because it might be too close to another's intellectual property, and how much innovation brainpower is diverted from developing equipment that might help golfers play better....I don't think this trial helps the game, certainly. Seems messy, not particularly honorable or, in the word of the day when it comes to manufacturer relations, "collegial." Never should have happened, in fact.'

There are lessons to be learnt here.  For starters, the world of patents is not the exclusive domain of the corporate giants or those who invent life-saving or other ground-breaking products - it's equally available to the individual or SME, even one who comes up with a product that's just playful (the other side of that coin, of course, is that the individual or SME needs to consider the possibility of patent infringement before launching any new product).  Second, litigation may sometimes be necessary, but it should never be started lightly: not only is it expensive, but it is also time consuming,  so much so that the parties may well  have moved on to new things by the time the case is finalised.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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