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Acushnet Announces Retail Exchange Program in Pro V1 Patent Dispute
Acushnet Company, the golf business of Fortune Brands, Inc., announced that in relation to the ongoing patent dispute with Callaway Golf, it has initiated a product exchange program to eliminate any market confusion and minimize the business impact to retailers of the court injunction against certain Pro V1 products. The injunction took effect January 1, 2009. The company does not expect the exchange program to have a material adverse impact on its results.
As previously announced, the production of existing Pro V1 model golf balls was converted in September to be outside the patents at issue. Acushnet began shipping the converted product to retailers in November. Acushnet has requested that, as of January 1, retailers sell only these converted Pro V1 and Pro V1x golf balls. There are limited amounts of non-converted Pro V1 model golf balls in retail inventory, and Acushnet has requested that retailers return all non-converted golf balls remaining in their inventory as of January 1 in exchange for converted product. Converted product can be identified by a black or red circle on the dozen box and sleeves. The injunction and exchange program are limited to the United States and do not apply to retailers, distributors or tour usage outside of the U.S.
"We have made every possible effort to ensure that this legal dispute did not find its way into the golf marketplace," said Wally Uihlein, Chairman and Chief Executive Officer, Acushnet Co. "Unfortunately, our attempts to resolve the difference of opinion on the retail inventory issue with Callaway have been unsuccessful. As a result, we decided that it is critical to remove this uncertainty for golf retailers and minimize any impact on their business, particularly during these already challenging times." Details of the product exchange program have been communicated directly to retailers by Acushnet and are available at www.titleist.com.
On November 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 November 19, 2008, to seek relief from the injunction, and to appeal the district court actions and other of the court's decisions. Although a stay of the injunction was not granted, Acushnet will continue to vigorously defend its position that all claims of all four patents at issue are invalid in the appeal process. The appeal will include the fact that the U.S. Patent and Trademark Office has issued final office actions that have determined these patents to be invalid. The Appeals Court will next review these complex issues in far greater detail and will likely render a decision sometime late in 2009.
Acushnet is the industry leader in developing golf ball technology and has over 650 active golf ball patents, more than any other manufacturer. Titleist Pro V1 golf balls are the product of technology developed and accumulated by Acushnet over the past 20 years, and over 65 Acushnet Company patents are related to the Pro V1 family.
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