I really feel that you must call up the children's parent and principal and NICELY (no lawyer or newspaper threatening like another poster suggested, that is just ludicrous) have a conversation with them about how this is affecting your son.
How old are your kids? I know you said you dealt with this yourself as a child, and believe me I wholeheartedly feel for you, but have you dealt with this as a parent? If you have you would know then that MOST parents don't give a care if it is their kid and will do very little about their kid's bullying behavior. They may bs you and say that they do, but when it comes down to it, they will always protect little Johnny or little Susie and do little. It is very few and far between that you meet parents who will really stop this as they should. I know disgusting, but true.
Yes I sadly know this firsthand. It is one thing to go through it yourself, which I did with one person in my 8th grade year. But it is a whole other ballgame to go through it with your child. The pain is almost unbearable.
OP, I highly recommend that you go to the administration and his teacher about this. This needs to be stopped and you need to stop it for him. It can lead to tragic consequences if you don't. Your son does need to also stick up for himself. I normally don't believe in violence, but if they say something, he needs to say something back. If they hit, he needs to hit back. A few years ago I would have NEVER ever said this, but today is a different story.
I have seen and lived first hand how it is to teach your child the "right thing" by being the better person, ignoring what the bully says, always being polite, etc. It doesn't work, sadly. It sets them up for more.
I did go to the administration and the adminstration was informed of EXACTLY what was going on through a written format, i.e. a paper trail. They were also informed of EXACTLY who would be held liable if this behavior continued. There are laws on bullying and I wanted to know why we were already in the 4th month of school and why no one had caught this yet as it had been going on at least for 2 months.
My child's bullying was so bad that other kids were going home to their parents and complaining of what was happening because they didn't know what to do. These parents in turn called me. When I noticed, and believe me I did, that my child was depressed I did do something about it and took him to counseling. But he wouldn't fess up, because he was so afraid of these kids, to anyone until it had already gone on for months.
By the next am I was up at that school, no appointment, unannounced. The principal and I had a meeting and then after school the principal/teachers and I had a meeting. Clear, level headed expectations were put on the table that were unnegotiable. There was no screaming, although alot of helpless crying, and no threats. But I was crystal clear in the paper trail I was leaving and the principal said she was very aware of what was going on here. I smiled and said good, then we are both on the same page. There has been one bump, but for the most part, the expectations have been met and the bullying has stopped dead in it's tracks.
None of the parents have come forward to say a word to my family. The one family my son was best friends with the kid and always at their home or him at mine. Those parents try to act like nothing happened. It makes me sick. I have zero respect for them and hope someone else pays them back in spades.
I believe in karma, and they will get their just desserts from this kid. I just hope I am made aware when it happens. I don't care how that sounds either, they have it coming. Their kids is doing bad things and they are unaware. It won't be long before it is drugs as the booze has already been passed around and drank. They aren't paying attention and she told me a year ago that she just can't control her kid. Who waves the white flag when a kid is 12? Oh well, their problem, not mine. He is headed down a bad path and they can thank themselves for not paying enough attention and intervening when they should have.

Yes I am still mad as he$$.
I wish you luck with this. I know it is heartbreaking. PM me anytime.
For the other person who said it happened to her son, she intervened, the kid was made aware and now the kids are friends again, please, please have eyes in the back of your head regarding this "friendship."
This same exact thing happened with my own child, the child bullied. I thought the christian, "right thing" to do was to have my child forgive as this bully child said he was sorry and didn't realize what he was doing was wrong. He said he was just kidding and didn't realize he was being a bad person. I told mine that when someone says that, the thing to do was to give a second chance and forgive as everyone makes mistakes.
Well that was the biggest mistake of my life. He was the main bully this year and I wish to God I would have had my child forgive him (to teach my kid the right thing) but
never give him a second chance and be friends with him again. This year has been the hardest thing to go through for my child and to sit back and watch it has been awful. Cut that friendship as real friends don't do cruel things to one another or mistreat one another. I know kids have to learn, but not at the expense of another's feelings.