Callaway Golf v. Dunlop Sports Group America, Inc.

The Situation

Callaway Golf Company sued Dunlop Slazenger Group Americas Inc. (Dunlop) for false claims made in its advertising campaign for the A-10 golf ball. Dunlop claimed that the A-10 was "The Longest Ball on Tour." Callaway argued that the claim was demonstrably false. Even Dunlop's own internal testing of the A-10 versus Callaway's CTU 30 and HX golf balls indicated that the Callaway balls traveled further. Callaway sought up to $2.5 million in damages and for the cost of corrective advertising.

In a counterclaim it filed in the case, Dunlop accused Callaway of acquiring, using and disclosing Dunlop trade secrets. According to the claim, the secrets were obtained from a former Dunlop employee hired by Callaway. Dunlop sought more than $18 million in damages.

NERA's Role

Retained by Callaway, NERA Senior Vice President Dr. Alan J. Cox testified to the additional profit that Dunlop received as a result of its false claim that the A-10 ball was the longest ball on tour. He calculated between $2.2 and $2.5 million for the damages suffered by Callaway as a result of the false claim and the cost of advertising required to overcome the impact of the false advertising. Dr. Cox also undertook a detailed review of Dunlop's damage claim. His analysis indicated that, after making suitable corrections, the value of the alleged trade secrets to Callaway were zero or close to zero based upon the usefulness of the material allegedly containing trade secrets.

The Result

A jury in Wilmington, Delaware returned a verdict of $2.2 million in favor of Callaway and against Dunlop on the false advertising claim. Additionally, the jury rejected Dunlop's counterclaim that Callaway Golf Company used any Dunlop trade secrets.