Golf-Ball Makers Trade Lawsuits
MELISSA BLOCK, host:
From NPR News, this is ALL THINGS CONSIDERED. I'm Melissa Block.
ROBERT SIEGEL, host:
And I'm Robert Siegel. The companies behind two familiar names in the golf business, Callaway and Titlist, exchanged lawsuits this week. The object of their wrath was one shared by millions of weekend hackers, the humble golf ball.
Joining us, as he does most Fridays, is sportswriter Stefan Fatsis. Hi, Stefan.
STEFAN FATSIS: Hey, Robert.
SIEGEL: And I warn you, you're talking to somebody who has actually bought a club because it possessed carbite technology, but lawsuits over golf balls, why?
FATSIS: Two good reasons. The golf ball market totals about three quarters of a billion dollars a year in the United States, and the technology is complex. Companies hold hundreds of patents on golf balls.
We have come a long way from the feather-stuffed leather ball of the 18th century or the Gutta Percha ball of the 19th century, even from the rubber golf ball, the rubber core wrapped in rubber thread that revolutionized the game when it was invented in the late 19th century.
At issue here is the most recent revolutionary invention, the multilayer, solid-construction golf ball with a polyurethane cover, which was developed in the 1990s and quickly replaced the wound ball.
SIEGEL: And the lawsuits are between Callaway and Acushnet, which owns the Titlist brand. Give us the background on the suits.
FATSIS: Well, in 2003, Callaway acquired Top Flight, and Top Flight held four patents governing solid-construction golf balls like these. In 2006, Callaway sued Acushnet, saying that the Titlist Pro V 1 and Pro V 1X balls violated those patents, and these are among the best-selling golf balls of all time.
More than 50 million dozen, worth more than $1.5 billion of these balls, have been sold since they were introduced in 2000. In 2007, though, a jury ruled in favor of Callaway. Acushnet had to stop making the balls at the end of 2008.
The company said it tweaked the design and began selling new versions of the same balls, but now Callaway says those balls violate its patents, too. Acushnet, in turn, decided to file a lawsuit against Callaway, saying that its Tour I and Tour IX balls violate nine of Acushnet's patents on multipiece, solid-core technology.
SIEGEL: How much technology, engineering or science is there actually behind these golf balls?
FATSIS: A lot. In one of these lawsuits, a Callaway executive testified that it took 25 to 40 designers - including Ph.D. polymer chemists, chemical engineers, mechanical engineers and Ph.D. physicists - three years and over $170 million to design and launch a golf ball known as the Rule 35 in 2000.
Acushnet has said that it has more than 650 active patents on golf balls, including more than 65 on the Pro V 1 alone. You need a chemistry degree to read the legal filings in this case.
SIEGEL: Now, we should say that these are golf balls which, if you can manage to buy them for $3.50 a ball, that's a bargain, and you can buy cheaper balls, and by the time you've hit them in the water, somebody's retrieved them and sold them as used golf balls; they all go for about the same price. Which brings me to the question of money and golf. It's an expensive game. Is it hurting in these recession times?
FATSIS: Absolutely. I mean, this is a $6 billion business, and you've got dozens of companies fighting over a very narrow slice of this high-end sport that depends on selling duffers like you, Robert, new equipment and new gizmos.
The number of rounds played is down. Advertising by equipment manufacturers is down. Analysts expect the golf business to drop 10 percent or more this year, and smaller equipment manufacturers are going to face the toughest times.
There's already been a lot of turnover in the golf equipment business. One familiar name, MacGregor, pulled out of the PGA merchandise show in January and has been laying off staff and liquidating inventory.
So you can argue that lawsuits like the one involving Callaway and Acushnet are frivolous, that these companies maybe should be looking for ways to reduce prices to keep consumers during this recession. But at the same time, you can look at it this way.
This is a cut-throat business. These companies need to protect their market share and eat into their competitors' market share.
SIEGEL: Well, thank you, Stefan.
FATSIS: Well, go hit some Titlist Pro V 1s this weekend.
(Soundbite of laughter)
SIEGEL: OK. Sportswriter Stefan Fatsis, who talks with us on Fridays about sports and the business of sports.
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