Callaway 2008 Annual Report Download - page 32

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On February 13, 2008, Ogio International Inc. filed a complaint for patent infringement against Callaway
Golf in the United States District Court, for the District of Utah, Case No. 08CV116. Specifically, Ogio alleges
that Callaway Golf’s sales of Warbird XTT, Warbird Hot, Terra Firma X, Terra Firma XI, CX Cart, Euro Stand,
and Matrix and Hyper-X golf bags infringe one or more claims of United States Patents numbered 6,877,604 and
7,213,705. The complaint seeks compensatory damages and an injunction. The Company has answered the
complaint denying that it infringes the patents. Discovery has not yet commenced and no trial date has been set.
On May 8, 2008, Kenji Inaba filed a suit against Callaway Golf Japan in the Osaka District Court in
Japan. Inaba has alleged that certain golf balls sold by Callaway Golf Japan with a hex aerodynamic pattern
infringe his Japanese utility design patent No. 3,478,303 and his Japanese design patent No. 1,300,582. Inaba is
seeking damages pursuant to a royalty based on sales. The Court has conducted hearings to consider the
respective positions of the parties on infringement, non-infringement and invalidity. A decision is expected on
the matter sometime during 2010. Callaway Golf Japan has also filed a proceeding with the Japan Patent and
Trademark Office seeking to invalidate the patents in suit.
On May 13, 2008, Clear with Computers, LLC (“CWC”) filed a patent infringement suit against Callaway
Golf Company, Callaway Golf Interactive, Inc., and forty-five other defendants in the Eastern District of Texas.
CWC alleges that Callaway Golf’s websites (www.callawaygolf.com, www.odysseygolf.com,
www.benhogan.com, and www.topflite.com) infringe U.S. Pat. Nos. 5,615,342 and 5,367,627, relating to
computer-assisted proposal generation and part sales methods. On November 17, 2008, the Company resolved
the case pursuant to a confidential settlement agreement. The complaint was dismissed with prejudice on
December 2, 2008.
On July 11, 2008, the Company was sued in the Eastern District of Texas by Nicholas Colucci, dba EZ Line
Putters, pursuant to a complaint asserting that the Odyssey White Hot XG No. 7, White Hot XG (Long) No. 7,
Black Series i No. 7, and White Hot XG Sabertooth putters infringe U.S. Patent No. 4,962,927 and infringe the
alleged trade dress of plaintiff’s EZ Line putters. The Company responded to the complaint on September 5,
2008, denying that it infringes the patent or the trade dress. Pursuant to a scheduling conference held on
October 6, 2008, the Court set various pretrial deadlines and a trial date of March 1, 2010.
On January 19, 2009, the Company filed suit in the Superior Court for the County of San Diego, case no.
37-2009-00050363-CU-BC-NC, against Corporate Trade International, Inc. (“CTI”) seeking damages for breach
of contract and for declaratory relief based on the asserted use and transfer of corporate trade credits to the
Company in connection with assets from Top-Flite in 2003. On January 26, 2009, CTI filed its own suit in the
United States District Court for the Southern District of New York, case no. 09CV0698, asserting claims for
breach of contract, account stated and unjust enrichment, and seeking damages of approximately $8.9 million.
The Company and its subsidiaries, incident to their business activities, are parties to a number of legal
proceedings, lawsuits and other claims, including the matters specifically noted above. Such matters are subject
to many uncertainties and outcomes are not predictable with assurance. Consequently, management is unable to
estimate the ultimate aggregate amount of monetary liability, amounts which may be covered by insurance, or the
financial impact with respect to these matters. Management believes at this time that the final resolution of these
matters, individually and in the aggregate, will not have a material adverse effect upon the Company’s
consolidated annual results of operations, cash flows or financial position.
Item 4. Submission of Matters to a Vote of Security Holders
None.
19