Will the Court Order an Injunction Regarding Titleist ProV1 Golf Balls? If So, Will the Court Stay the Injunction Pending Acushnet’s Appeal?

Let me set the stage, as I know that all the filings in the ProV1 patent dispute can become overwhelming. Back in December a jury found that 8 of the 9 claims in the 4 patents-in-suit were valid, and therefore infringed by Acushnet (click HERE to read the post on the verdict). Then, in mid-January Callaway filed a Motion for Permanent Injunction (click HERE to read the related post) seeking to bring a halt to the production and sale of ProV1’s. Next, Acushnet responded to Callaway’s motion at the end of February (click HERE to read the related post). Roughly at the same time Acushnet also wisely filed a “Contingent Motion to Stay Any Permanent Injunction Pending Appeal,” which you may review /files/22847-21779/20080313_Callaway_Golfs_Opp_to_Acushnet_Motion_to_Stay_any_Perm_Injunct.pdf”>HERE to read) to Acushnet’s “Contingent Motion to Stay Any Permanent Injunction Pending Appeal.” Now, Acushnet filed their reply titled “Acushnet’s Reply Brief in Further Support of Its Motion to Stay Any Permanent Injunction,” which may be viewed in the entirety Acushnet Company (“Acushnet”) files this reply in further support of its contingent motion to stay, pending appeal to the Court of Appeals, any permanent injunction that may issue.

Since Acushnet’s opening brief was filed, the reexaminations of the patents-in-suit have progressed further and these proceedings are reaching the final stage at the examiner level, On March 4, 2008, the Patent Office issued an action again rejecting all the claims of the ‘130 Patent. See Exhibit A, 3/4/08 Office Action re ‘130 Patent. In addition, the Patent Office issued an order closing prosecution on the merits as to the ‘130 patent. Id at 2. This means that the examiner has completed his review (subject to certain Patent Office procedures), concluded that the patent is invalid, and is prepared to force Callaway to either amend and narrow the claims or appeal his decision to the Patent Office Board of Appeals and Interferences.

As a result, Callaway can no longer hide behind the “interim” or “tentative” adjectives it has used in the past to describe proceedings in the Patent Office. The reexamination examiner has concluded that the ‘130 claims are invalid. That phase of the reexamination is essentially over. Callaway has lost. Given the schedule followed by the Patent Office in this and previous examinations, it is likely that within three months similar actions closing prosecutions will be issued on the other three patents-in-suit.

Unable to derail or dismiss the Patent Office’s inexorable progress towards invalidating the patents-in-suit, Callaway spends much of its brief requesting that the Court ignore the Patent Office’s repeated findings. Callaway argues that the proceedings should be ignored because Acushnet filed them in breach of the 1996 Agreement, as the Court has found. D.I. 457 at 21-22. This argument is misplaced.

Acushnet initiated the reexaminations in good faith, believing that the 1996 Agreement did not apply. The Court found otherwise, and Acushnet will appeal that finding. However, once initiated, the reexaminations were conducted by the Patent Office pursuant to its statutory duty to reexamine patents and to strike invalid patents. Callaway fully participated in the reexamination, made all of its arguments, and lost. Callaway can appeal that decision in the Patent Office. In this Court, Callaway may, in the end, have a remedy for breach of contract, but that fact in no way detracts from the fact that the Patent Office decision demonstrates that Acushnet has a strong likelihood of success on appeal.

Callaway also fails to explain how it is possible for the Court to make a proper balancing of the equities, which involves a determination of whether damages are adequate to fully compensate Callaway for infringement, without first determining what those damages should be. Callaway apparently cannot dispute Acushnet’s showing on this point.

Callaway’s opposition and actions since the jury verdict also suggest that Callaway hopes to use the injunction as a marketing tool to undermine Acushnet’s relationships with its retailers and customers. Callaway also seeks to use the injunction as a hammer to try to pressure Acushnet to settle, as it tacitly admits in its opposition brief. D.I. 457 at 9. Neither of these is a legitimate purpose of an injunction. Acushnet reiterates that any determination of an injunction should be made once all relevant information is available to the Court. Callaway should not succeed in its attempt to have the Court rush to judgment on this vital matter.

In Nichols Institute Diagnostics, Inc. v. Scantibodies Clinical Laboratory, Inc., 166 F. App’x 487, 488-89 (Fed. Cir. 2006), a party seeking a stay must demonstrate “either a strong likelihood of success on the merits or… that it has a substantial case on the merits and that the harm factors militate in its favor.” (emphasis added). As Acushnet has demonstrated, both in its opening brief, D.1. 441, and in its briefing of the injunction and post trial motions, D.I. 417, 434, it has a strong likelihood of success on appeal. Without a doubt it has at least shown a substantial case on the merits; Callaway will suffer little or no additional harm from a stay.