Court Sides with Callaway in ProV1 Dispute Regarding Breach of Contract Issue

3. In 2005, the parties unsuccessfully engaged in mediation (pursuant to the
Agreement) to resolve disputes regarding the Sullivan patents. Defendant
thereafter filed inter partes reexamination requests for each patent with the
United States Patent and Trademark Office (“PTO”). After filing the
present infringement action, plaintiff petitioned the PTO to suspend or
terminate the reexamination based on the Agreement; the PTO declined to grant
plaintiff relief. Plaintiff then amended
its complaint and moved for summary judgment with regard to breach of the
Agreement.

4. The court granted plaintiff’s
breach of contract motion on November 20, 2007, holding that defendant was
bound by the terms of the Agreement and that the Agreement precluded filing
requests for reexamination hearings before the PTO with respect to issues
related to the case at bar. A jury trial was held between December 5 and
14, 2007 on the issue of validity of each of the asserted claims, due to
obviousness. The jury returned a verdict that each asserted claim was valid but
one – claim 5 of the ‘293 patent – which it found invalid.

5. On August 12, 2008, defendant
filed a motion to dismiss plaintiff’s breach of contract claim and to vacate
the court’s November 20, 2007 opinion and order based on lack of subject matter
jurisdiction. In its memorandum opinion of November 10, 2008, the court
reluctantly granted defendant’s motion, despite the universal intention of the
parties for the court to retain jurisdiction over the performance of the
Agreement. The court concluded in this regard that, under Third Circuit precedent,
such intent was not manifested by a court order sufficient to confer subject matter
jurisdiction to enforce a settlement agreement. In its November 10, 2008
opinion, the court noted that,

despite the result compelled by the applicable
precedent in this instance, the court does not condone defendant’s lamentable
behavior in this case. Defendant manifested an intent for the court to retain
jurisdiction, ignored every opportunity to contest jurisdiction, and retained a
benefit from the presumption that jurisdiction existed where it suited it.
Defendant elected to challenge jurisdiction only after defendant lost its
invalidity case, presumably to minimize its overall losses. Surely it was not
the intent of the Sawka’ and Kokkonen Courts to allow such gamesmanship at the expense
of nearly two years of court resources.

Defendant filed a notice of appeal of the jury verdict to the Federal
Circuit on November 19, 2008.

6. Plaintiff timely filed a new action in the Delaware Court of Chancery to
pursue the breach of contract claim, seeking to reform the Agreement. At the recommendation
of the Chancery Court, the parties instead filed joint motions with this court,
pursuant to Fed. R. Civ. P. (“Rule”) 60. (“Joint Motions”)
The Joint Motions provided that,

importantly, given that the judgment in the Golf
Ball Patent Litigation is presently on appeal at the Federal Circuit, the
Parties will not at this time request further action from this Court on the
breach of contract claim. Rather, following completion of the current appeal,
and depending on how that appeal is decided, the Parties will submit a second
joint motion [(“the second joint motion”] to rehear in summary
fashion Callaway Golf’s breach of contract claim summary judgment motion, thus
allowing this Court to reissue its original grant of summary judgment in
Callaway Golf’s favor on that claim. Furthermore, to insure an efficient
resolution of the patent matter, Acushnet notes that to the extent it intends
to appeal the Court’s grant of summary judgment on Callaway Golf’s contract
claim, Acushnet will pursue that appeal after all other remaining issues have been
resolved by this Court in the Golf Ball Patent Litigation, including any damages
relating to infringement and the breach of contract, which the Parties agree
will be heard jointly in any damages phase of the Golf Ball Patent Litigation.

In July of 2009, the court granted
the Joint Motions, re-opened the 1996 cases, and entered modified stipulations
of dismissal addressing the jurisdictional issue that led to the court’s
earlier dismissal of plaintiff’s breach of contract claim.

7. In August 2009, the Federal Circuit issued its decision reversing-in-part
and remanding for a new trial on validity. On October 15, 2009, the Federal Circuit
remanded the case for further proceedings not inconsistent with its decision. A
second jury trial on validity was held in March 2010, concluding in defendant’s
favor. Presently before the court are various post-trial motions, including
plaintiff’s motion pursuant to Rule 60 (“the Rule 60 Motion”), filed November
8, 2010, to vacate the court’s order dismissing plaintiff’s breach of contract claim
for lack of jurisdiction and to reinstate the court’s November 20, 2007 decision
granting summary judgment.

.

.

.

9. Discussion. Plaintiff argues that
the court may grant the Rule 60 Motion pursuant to Rule 60(b)(5) or (6), that
defendant agreed in the Joint Motions to support granting of the Rule 60
Motion, and that defendant now refuses to do so at this time in order to allow
the PTO’s reexamination proceedings to move forward to plaintiffs disadvantage.
Plaintiff alleges that it has been notified by the PTO that a reexamination
hearing regarding the subject patents will commence January 19, 2011. Defendant
argues that the Rule 60 Motion is untimely in that it should have been filed
after the Federal Circuit’s decision and before the second trial, to allow patent
damages and contract damages to be tried together, and that plaintiff delayed by
over one year from the date of the issuance of the Federal Circuit’s decision. Defendant
also argues that plaintiff’s efforts to terminate or suspend the PTO
proceedings are futile.

10. The circumstances at bar are exceptional. The court’s original grant of a summary judgment establishing
contractual liability was vacated at the behest of defendant, frustrating the
original intent of the parties and the court. Defendant has now stipulated to
the very jurisdiction that it formerly contested, thus allowing the court to
“reissue its original grant of summary judgment in [plaintiff’s]
favor.” Both parties stipulated to the filing of a motion under Rule 60;
the only issue is the timeliness of the filing. The Joint Motions are vague
as to the time for filing the Rule 60 Motion, providing only that,
“following completion of the current appeal, and depending on how that appeal
is decided, the Parties will submit [another] joint motion.”

11. Defendant argues that “[t]he
Parties agreed … that they would file a joint motion to vacate at a time that
would allow patent damages and contract damages to be tried together. That time
has passed; the trial on patent damages occurred in March of 2010.” Further,
defendant admits that the Rule 60 Motion would be timely if submitted after the
Federal Circuit has addressed any appeals from the patent case, including
resolution of all patent liability issues, which has not yet occurred. The
court concludes, therefore, that the Joint Motions established a window of time
for filing the Rule 60 Motion that opened on October, 15, 2009, the date the Federal
Circuit remanded the case.

12. Defendant’s arguments point to a conclusion that the window is either
still open (pending appeal) or closed no earlier than March 2010 at the
commencement of the second trial. The Rule 60 Motion was filed November 8,
2010, either within the window itself or well within one year of its close.
Even if the Joint Motions were construed so as to require that the Rule 60
Motion be filed immediately “upon completion of the current appeal,”
the instant motion would have been filed less than thirteen months from that
time. Further, the Joint Motions place responsibility for filing the Rule 60
Motion on both parties. Plaintiff filed the instant motion unilaterally only after
defendant refused to support it. Although defendant now argues that the Rule 60
Motion is untimely, defendant fails to point to evidence of record that it attempted
to timely file a similar motion. The court finds the timing of the Rule 60 Motion
to be reasonable under such circumstances.

13. Defendant’s arguments regarding resolution of damages and effect on the PTO’s
reexamination proceedings are of no moment in determining whether relief under
Rule 60 is appropriate. Granting the Rule 60 Motion for summary judgment, at this
time, does not necessarily require that contract damages be tried separately
from patent damages. Defendant admits that, if the court grants plaintiff’s
motion for a new trial, it would “not object to the present motion at that
time.” Establishing contractual liability now instead of later militates
in favor of granting the Rule 60 Motion by limiting delay and allowing the
court flexibility in scheduling a trial on damages. There is no reason to
deprive the PTO of any benefit, no matter how limited, it may receive from the
court’s judgment in this matter. That the PTO may not be induced to terminate
or suspend reexamination proceedings based on such judgment is of no moment to
the equitable principles involved in the issue at bar.

14. The court finds that vacating the order dismissing summary judgment is proper
under Rule 60(b)(6), that reinstating the order granting summary judgment is proper
under Rule 60(b)(5) or, in the alternative, Rule 60(b)(6), and that the Rule 60
Motion is timely pursuant to Rule 60(c)(1).

15. Conclusion. Based upon the foregoing,

IT IS FURTHER ORDERED that:

1. This court’s order of November 10, 2008 dismissing plaintiff’s breach of contract
claim for lack of jurisdiction is hereby vacated; and

2. This court’s order of November 20, 2007 is hereby reinstated as to granting
plaintiff’s motion for summary judgment of breach of contract and denying defendant’s
motion for summary judgment of no breach of contract.