Callaway 2007 Annual Report Download - page 31

trial, and ruled that the issues of damages and willfulness would be decided in a second trial between the parties.
On the eve of trial, Acushnet stipulated that its Pro V1 golf balls infringe one or more of the nine claims in the
four patents asserted by Callaway Golf. As a result of the Court’s rulings, and Acushnet’s concession as to
infringement, only the validity of the patents was tried before a jury commencing on December 5, 2007. On
December 14, 2007, after a six day trial, a unanimous jury decided that eight of the nine patent claims asserted by
Callaway Golf against Acushnet are valid. The Court entered judgment in favor of Callaway Golf and against
Acushnet on December 20, 2007. Callaway Golf has requested that the Court enter a permanent injunction
requiring Acushnet to stop production and sale of the Pro V1 golf balls. Acushnet has asked the Court to enter
judgment notwithstanding the verdict or, alternatively, for a new trial. Those two motions are pending.
Acushnet also filed petitions for reexamination with the United States Patent and Trademark Office (“PTO”)
challenging the validity of the patents asserted by Callaway Golf. Although the PTO agreed the petitions for
reexamination raised substantial new questions of patentability, and issued a first office action preliminarily
rejecting the claims of all four of the patents, the PTO has not made a final and binding determination as to the
validity of any of the patents. The interim rulings by the PTO do not void the Court’s judgment.
On June 9, 2007, the Company filed a complaint in the United States District Court for the District of
Delaware, Case No. C.A. 07-367, asserting claims against Acushnet Company for patent infringement. Callaway
Golf asserts that Acushnet’s sale of numerous drivers, including but not limited to the King Cobra 454 Comp,
King Cobra F Speed, King Cobra HS9 F Speed, King Cobra HS9 M speed, and King Cobra LD F Speed, Titleist
905R, Titleist 905S and Titleist 905T drivers, infringes one or more of Callaway Golf U.S. patents (numbers
6,348,015; 6,478,692; 6,669,579; 6,685,576; and 6,949,032). Callaway Golf is seeking damages and an
injunction to prevent future infringement. Acushnet has answered the complaint denying infringement of any
valid patent and asserting counterclaims against Callaway Golf. Acushnet asserts that sales of Callaway Golf’s
FT-i, FT-5, X-460, X-460 Tour, Big Bertha Fusion FT-3 and Big Bertha 460 drivers infringe two patents issued
to Acushnet, namely U.S. patent numbers 6,960,142 and 7,041,003. Acushnet seeks damages and an injunction
as well. Callaway Golf responded to the counterclaim on August 31, 2007, denying infringement of any valid
patent claim. The parties are engaged in preliminary discovery. The trial of this matter is set to commence in the
District Court on May 18, 2009.
On August 1, 2007, the Company filed a complaint in the United States District Court for the Eastern
District of Texas, Case No. 207CV329, asserting claims of patent infringement against TaylorMade Golf
Company, Inc. Specifically, Callaway Golf is asserting that sales of certain TaylorMade irons infringe Callaway
Golf’s U.S. patent No. 5,704,849. Callaway Golf is seeking damages and an injunction to prevent future
infringement. On September 4, 2007, TaylorMade answered the complaint denying infringement.
On August 4, 2007, Callaway Golf filed a complaint in the United States District Court for the Southern
District of California, Case No. 07 CV 1424, asserting claims against TaylorMade Golf Company, Inc. for patent
infringement and seeking declaratory relief. Specifically, Callaway Golf asserts that TaylorMade’s sales of its
TP Red and TP Black golf balls infringe Callaway Golf’s U.S. Patent Nos. 6,638,185 and 7,160,207, which relate
to multi-layer golf balls. Callaway Golf is also seeking declarations of license, invalidity, unenforceability, and/
or non-infringement of TaylorMade’s U.S. Patent Nos. 6,991,558, 7,198,575, 6,719,644, and 6,547,678.
TaylorMade filed an answer and counterclaim asserting non-infringement and/or invalidity of Callaway Golf’s
golf ball patents. TaylorMade also asserts that certain of Callaway Golf’s drivers, including the FT-i, FT-5, and
Big Bertha 460 infringe its above-named patents and related patent applications. In addition, Taylor Made is
seeking declarations of invalidity, unenforceability, and non-infringement of Callaway Golf’s U.S. Patent Nos.
5,704,849, 5,409,229 and 5,605,511, which relate to undercut irons.
On December 14, 2007, Callaway Golf and TaylorMade issued a joint press release announcing a resolution
of all pending litigation between the parties. Specifically, the parties announced that they entered into a
settlement and patent license agreement under the terms of which each company has specified rights to make
products under patents owned by the other. Technologies at issue include high moment of inertia drivers,
undercut irons, and golf balls.
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