Golf News

Costco Sues Titleist in Battle Over Golf Balls

The discount retailer, which improbably caused a frenzy in the golf world when it started selling low-priced but well-reviewed balls last year, filed a lawsuit against the parent company for Titleist, maker of the self-proclaimed “number one ball in golf.”

In a complaint filed Friday in U.S. District Court in Seattle, Costco preemptively asked the court for a declaratory judgment defending its business practices. The retailer said that the lawsuit was necessary because Acushnet Holdings Corp., which owns Titleist, accused Costco in a “threatening letter” of violating its patent rights and engaging in false advertising.

The lawsuit provides a window into the high-tech engineering—and often litigation—that goes into golf-ball design, and reflects Acushnet’s vigilance in maintaining its market share. Though Titleist also sells golf clubs, it is known primarily for its balls. Attorneys for Costco and an Acushnet spokesman declined to comment.

Costco began selling the balls under its Kirkland Signature brand in 2016 at $29.99 for two dozen, or $1.25 per ball, which made them among the cheapest on the market. After the ball was reviewed favorably to the best-selling Titleist ProV1, which is priced at around $4.00 per ball, the Costco ball sold out, creating a pricey secondary market for it on eBay. The frenzy among golfers to obtain the Costco balls was detailed in a Wall Street Journal article in January.

According to Costco, the infringement accusations by Acushnet are based on 11 patents related to the design of Titleist golf balls. The false advertising claim is based on Costco’s guarantee that all Kirkland Signature products “meet or exceed the quality standards of leading national brands.”

The 11 patents referenced in the complaint describe golf balls on a level that would be indecipherable to most golfers. They delve into design details as granular as the surface hardness of the outer core and the relative surface hardness of the inner core. But they represent only a tiny fraction of patents owned by the major ball manufacturers. Acushnet is named in 2,577 patents, according to the U.S. Patent and Trademark Office.

Marc Reiner, a partner at the law firm Hand Baldachin Amburgey specializing in commercial litigation, said a professor of his in law school two decades ago cited golf balls as a field saturated with patents. “As she put it, ‘Every time they add a new dimple, they go and apply for a patent,’” Reiner said.

Costco, which has no history of making golf balls, bought the Kirkland Signature balls from a company called Nassau Golf, which also manufactures balls for TaylorMade, a major equipment company. An official at Nassau’s ball factory in South Korea told the Wall Street Journal in January that there was no regular supply chain to Costco, which has since removed the listing for the balls from its website. Costco says in the complaint it plans to sell the balls again in the future.

Costco’s argument against the alleged patent infringements is twofold: that no such infringements occurred, and that the 11 patents are invalid. The patents are not necessarily in relation to actual Titleist balls for sale.

Dean Snell, a former ball designer at Titleist and TaylorMade who now sells low-priced balls under the Snell Golf brand, said the purpose of all the patents isn’t merely to protect the designs of balls currently on the market. It is also to prevent competitors from using new innovations in future designs.

“In this industry, if you look at the amount of patents filed every day versus the number of golf balls actually made, it’s a ridiculous number,” Snell said.

The Costco lawsuit against Acushnet was first reported by golf-patents.com.

Costco is not the first company to find itself in a legal dispute with Titleist over golf balls. In 2012, Acushnet settled a lawsuit filed against it by rival Callaway in 2006 that alleged that the Pro V1 infringed on Callaway patents. In 2015, Acushnet sued 10 small companies, accusing them of infringing on its patents for ball dimple patterns.

The case was dismissed in 2016, though some of the companies settled or folded rather than fight it in court. In Costco, the retail giant, Titleist faces an altogether different opponent. “This is a duel between 800-pound gorillas,” said Adam Beach, owner of an equipment review website called MyGolfSpy, which bills itself as the Consumer Reports of golf. “Titleist has been viewed by many in the industry as kind of a bully. This time, they’ve run up against a bigger bully than they’ve ever gone up against before.”

By BRIAN COSTA March 20, 2017@the Wall Street Journal
Corrections & Amplifications
In Costco, the retail giant, Titleist faces an altogether different opponent. An earlier version of this article misstated the latter company’s name as Titelist in the final paragraph. (March 21)

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