- March 30, 2017
Costco Corporation has filed suit in Washington federal court, seeking a declaration that its discount golf ball, the Kirkland Signature (KS) ball, does not violate any patents held by golf brand Titleist’s parent, Acushnet Co.
Costco initiated this declaratory action when Acushnet allegedly sent “a threatening letter” accusing it of patent infringement and false advertising. Acushnet, a Massachusetts company, manufactures one of the top golf performance equipment brands, Titleist. The patents at issue, in pertinent part, relate to the hardness of the golf ball’s outer core; the inner core’s surface hardness; the first three layers of the golf ball’s “coefficient of restitution;” and the KS ball’s percentage of “dimples.”
Notably, a 12-pack of Titleist “Pro V1” golf balls retails for around $50, while the same quantity of KS golf balls sell for approximately $15 — less than half the price of the “V1” balls.
In its complaint, Costco seeks a declaration that the “KS” golf ball does not infringe on any of Acushnet’s eleven patents and that there was no false advertising when it said that its products “meet or exceed the quality standards of leading national brands.”
Costco’s ten page complaint stated that “[t]he need for such relief exists because Acushnet accused Costco of patent infringement and false advertisement.” The complaint further stated that the “KS golf ball sold out quickly, and was praised by golfers and experts as a golf ball of tremendous quality and value. . . [and] [e]ven though the Costco KS golf ball has sold out, Costco plans to continue to sell the KS golf ball.”
While Titleist alleged that Costco’s tagline that its Kirkland Signature products “meet or exceed the quality standards of leading national brands,” is meant to communicate that the KS golf ball is of the same or greater quality than the “V1” ball, Costco claimed that it never made a public comparison between the two balls. Further, Costco’s complaint maintained that any reasonable consumer interpreting Kirkland’s general tagline would not read it as extending to “specific comparisons of quality” between the two golf balls at issue.
Importantly, however, Costco contended that even if a reasonable consumer reached that the conclusion, the statement is true, as many “individual golfers and golf ball testers and experts have used and/ or tested the KS ball and concluded that it is at least comparable to balls sold by other leading national brands, including Acushnet.”
If Costco is allowed to proceed with the advertising and sale of its “KS” golf ball, Titleist’s patents’ value will decline, as the company will be competing with a similar product—selling for less than half of the cost of its “V1” golf ball. However, on the flip side, if the court refuses to issue the declaration sought by Costco, Titleist will continue to have its “V1” golf ball dominate the market, and thus, consumers will be forced to spend upwards of $50 for a twelve-pack of golf balls.
On a side note, Costco’s timing may present the company with some obstacles, as it ventured into the golf ball market at time of declining public interest in the game. During the past decade, golf participation has decreased from 30 million participants in 2005 to about 24 million in 2015, as reported by the National Golf Foundation. Ironically, however, “by lowering the cost of golf balls, Costco is helping address one of the impediments to attracting new players—expense.”Tags: Acushnet Co, Costco, Kirkland Signature, Titleist