PXG vs. TaylorMade – UPDATE

There are wars, there are battles – and plenty of analogies are made about both.

Last week, PXG fired the first shot in what could prove to be a lengthy war when it filed suit in Federal court alleging multiple (eight to be specific) cases of patent infringements by TaylorMade, specific to its just-released P790 irons.

The first battle was won by TaylorMade late yesterday, when PXG’s request for a temporary restraining order to halt the sales of P790 irons, was denied by Judge John J. Tuchi in Arizona District Court. The decision means that TaylorMade P790 Iron sales will continue at least until November when the court will hear PXG’s request for a preliminary injunction.

While not unexpected, the result isn’t what PXG desired. The company has yet to comment publicly on the case, while TaylorMade was quick to celebrate its victory. The official statement from TaylorMade reads in part:

“While TaylorMade respects the intellectual property rights of others, we will always defend ourselves vigorously when someone falsely accuses us of infringement. Our victory in court today reaffirms our confidence in our products and technologies and reinforces the excitement and momentum we are experiencing with our P790 irons to date.”

Thus far, PXG has declined to offer a comment.

Retailers Targeted

A second battle is taking shape between PXG and TaylorMade’s largest retail partners. On Friday, PXG filed a similar complaint against the four largest golf retailers in the United States (PGA Superstore, Golf Galaxy, Dick’s Sporting Goods and Worldwide Golf). PXG’s position is that by selling TaylorMade’s P790, those retailers are doing irreparable harm to PXG’s business – again based on PXG’s assertion that the P790 infringes on its patents.

By suing retailers, PXG is taking the road less traveled, but it is a road other have taken with some success. Strategically, the move might make sense, although it’s certain to draw the ire of the retail chains targeted, and likely the mainstream wing of the industry as a whole. The reality is these chains won’t ever be part of PXG’s business plan, so there’s no risk of PXG losing sales directly, and we suspect that PXG Founder, Bob Parsons, doesn’t much care what his competitors think.

It should be mentioned that custom fitters who carry both TaylorMade and PXG have, as of yet, not been served with a complaint.

Patent infringements are germane to the manufacturer of the product and include those who distribute and use the product in question. As a result, retailers must decide whether to sell the P790 irons and assume potentially significant legal, financial risk or pull the product and allow what could be a lengthy legal process, to play out. Should retailers hold the product en masse, the net effect won’t be appreciably different than had PXG’s TRO request been granted in the first place.

I suspect TaylorMade has spent a good bit of the last 24 hours fielding phone calls and making assurances.

The Court of Public Opinion

No doubt, this issue will continue to divide passionate consumers on either side with some feeling this validates TaylorMade’s claims of a revolutionary technology on-par or better than the higher priced PXG offering, while others are behind the smaller, but well-heeled company willing to defend itself against a big OEM in transition looking to find its footing after losing its position as the #1 equipment company in golf.

For whatever it’s worth, count Callaway representatives among those happy to watch as the war progresses slowly along. Senior VP of Marketing and Brand Management, Harry Arnett, tweeted, “The more they slap fight each other, the more consumers buy Apex.”

The salient point is with fall product hitting shelves and more on the way, TaylorMade can’t afford to lose out on sales of what should prove to be one of its top-sellers. Worse still if those lost sales result in gains by the category leader, Callaway.

That could prove to be wishful thinking as the litigation itself has undoubtedly raised awareness of the P790. The lawsuit helps position it on level-footing with PXG’s premium-priced offering, and I suspect interest will be higher for it. Ire of retailers and the larger industry aside, the suit is also helping to raise awareness of the PXG brand by positioning its technology as so innovative that one the biggest names in golf needed to copy it (allegedly) to compete.

There’s enough upside for both brands here that a conspiracy theorist might believe they’re in this together.

While we wait for the legal process to play out, the court of public opinion won’t be short on judgment. Industry insiders who have seen cases like this play out before, to a man, have told us that they don’t believe PXG has much of a chance of winning. A patent lawyer with extensive experience in the golf industry echoed similar sentiment suggesting that while anything is possible, it is unlikely PXG will prevail.

Consumers are taking sides as well, but unless that translates to direct sales for one brand or the other, it won’t much matter.

TaylorMade can claim victory in the first of what is likely many battles to come. While we wait to see what happens next, I’ll leave you with this:

It’s estimated that only 30% of patents would stand up to the scrutiny of a challenge. As one of our sources told us, “it’s [the patent system] designed by the lawyers, for the lawyers, so that’s who wins in the end.”

You can take that to the bank.