Kirkland (Costco) Premium Golf Ball

[DaveP043]

As far as I read, Acushnet/Titleist never said anything to the public regarding the Kirkland ball, they simply sent a "threatening" letter to Costco.  From what I read, its not that Acushent is the gorilla, its Costco that seems to be trying to muzzle Acushnet/Titleist before they do make public comment.  If the Kirkland balls is indeed infringing on patents, and they can successfully squash patent enforcement efforts by intimidating "small" companies like A/T, what does that do to further efforts at innovation?  Are golf clubs next?  Will they use "turbulators" and intimidate Ping into silence?  I've had a glance at what Ping does to develop clubs, and it has to be a huge expense, I can't imagine that golf ball research is much cheaper.  

[iacas]

7 minutes ago, StevenR84 said:

If this did violate Titleist patents, why not file directly in court?

@No Mulligans answered:

4 minutes ago, No Mulligans said:

Usually a claim starts with a letter. If the other party backs down then legal costs are minimized. 

So… that.

4 minutes ago, Lihu said:

I'm not sure what Kirkland can do with a ball they don't manufacture that it could possibly violate any Acushnet patents?

They're the ones selling it. Directing its development. It's their brand and, thus, their ball. This is not some third-party brand ball they sell in their stores - it's their ball.

3 minutes ago, Lihu said:

Most patents don't have enough meat in them to be enforceable.

We're not talking about most patents. We're talking about these patents.

And part of owning a trademark or a patent is that you have to enforce them, IIRC.

[Lihu]

Just now, iacas said:

@No Mulligans answered:

So… that.

They're the ones selling it. Directing its development. It's their brand and, thus, their ball. They're not being sued for a third-party brand ball they sell in their stores.

We're not talking about most patents. We're talking about these patents.

And part of owning a trademark or a patent is that you have to enforce them, IIRC.

Well, I hope that Titleist doesn't get taken out by Costco. I'm a loyal customer to both companies and hate to see them fight over something like this.

[DwightC]

What if the KSig ball violates an Acushnet patent?

I have no idea what's in the Acushnet intellectual property portfolio and I'm not an IP lawyer, but a couple of observations:

Marketers promote products as innovative, new technology, patented, etc. without going into much detail about what exactly the nature of the patent is.  There are, for example, a whole class of patents, called process patents, which relate to how you make the product, not, say, the design of the product itself.  If the manufacturing process of the Ksig ball were found to infringe on an Acushnet patent, that would between Acushnet and the manufacturer, not Costco.

It's a lot easier to get a patent granted than it is to defend one, particularly when the party you're accusing of a patent violation has pockets even deeper than your own.  If you sue an alleged infringer, you run a substantial risk of having your patent invalidated.  That's one of the reasons companies send letters, hold discussions, go into mediation, etc., rather than just hauling off and suing each other.  Here, the letter was SOP, seeking the declaratory judgment is aggressive.

Candidly, without getting down in the weeds, but having read this thread and a couple of links, I'm not sure how the Ksig ball (if it was a knockoff of another company's ball being sold in Europe without allegations of patent infringement) could be infringing on Acushnet patents.

But, if the Acushnet patents were determined to be valid and if the ball was found to infringe on them, then presumably Costco would answer in damages.  I would guess that Costco's contractual arrangement with its vendor includes some kind of indemnity, but I don't know.  Given how Costco is proceeding here--seeking a declaratory judgment--punitive damages are highly unlikely, and, given Costco's margins (15%), liability capped at its profits from the sale of the balls is likely to be highly unsatisfactory to Acushnet, leaving Acushnet trying to recover its profits lost from the competition from the Ksig ball.  Good luck with that one.

 

 

 

[Lihu]

1 hour ago, DwightC said:

There are, for example, a whole class of patents, called process patents, which relate to how you make the product, not, say, the design of the product itself.  If the manufacturing process of the Ksig ball were found to infringe on an Acushnet patent, that would between Acushnet and the manufacturer, not Costco.

 

Quote

It's a lot easier to get a patent granted than it is to defend one, particularly when the party you're accusing of a patent violation has pockets even deeper than your own.

So true. . .

 

This is what perplexes me as well. I've been through the patent process many times and even in the defense of a couple.

Agree that, the deeper pockets usually win. They could just continue on until one of them runs out of money.

Edited March 21, 2017 by Lihu
Forgot to agree :-P

[boogielicious]

4 hours ago, DwightC said:

I don't know much about golf or golf merchandising, but I do know something about warehouse clubs, branding and law, and this should be entertaining.  Some things to keep in mind:

Costco is bigger than Acushnet.  Acushnet may be the 800 lb gorilla in the fairway mists, but Costco is the white hunter in the jungle rough collecting specimens for the Museum of Natural History back home.  Costco's market cap is roughly 60x that of Acushnet.

The Kirtland brand is every bit as important to Costco as Titleist is to Accushnet.  Think Craftsman and Sears, or 365 and Whole Foods.  I don't care whether you are talking about olive oil or bedsheets, bacon or golf balls, Costco needs its customers ('members') to perceive Kirtland Signature as the best, or as good as the best, and differences between it and other leading brands to be a matter of taste, style and design choice, not quality, reliability or durability.  (When Costco wants to offer lower quality merchandise at a lower price point, they have some captive brands, 32 Degrees comes to mind, to produce to that spec.)

Costco doesn't spend money on R & D, golf or otherwise.  That's the responsibility of their vendors.  If a former vendor (Acushnet) wants to divert R & D dollars to litigation expense, that's their business.  I doubt it even affects Costco's willingness to do business with them down the pike.  Here, I'm not sure if Costco should charge its expenses in this fight to the legal budget or to marketing.  They certainly are generating some good ink for themselves.

Bottom line--I understand why Acushnet wrote the letter, but putting it in the mail probably wasn't a very good idea.

Agree with you on this. Costco, like Walmart is a bit of a bully to their manufacturers. They dictate a lot of requirements. My company makes product for Costco. If they copied our product and re-branded it for themselves, we would sue them. They are not the innocent victims here.

[Lihu]

9 minutes ago, boogielicious said:

Agree with you on this. Costco, like Walmart is a bit of a bully to their manufacturers. They dictate a lot of requirements. My company makes product for Costco. If they copied our product and re-branded it for themselves, we would sue them. They are not the innocent victims here.

Neither company is that innocent.

Costco is trying to get more people to join up by providing premium balls at discount prices, while Titleist is trying to protect their $5/ball market.

Personally, I think Costco should sell Snell Tour balls for $1.20

Edited March 21, 2017 by Lihu
Added Snell comment

[boogielicious]

Just now, Lihu said:

Neither company is that innocent.

Costco is trying to get more people to join up by providing premium balls at discount prices, while Titleist is trying to protect their $5/ball market.

Titleist is trying to protect their IP. They have every right to do that. Costco may be stealing that IP. They did not design the ball or spend millions on R&D. They are trying to make a quick buck on someone else's work. How would you like it if I stole your idea and made money off it? Size of the company does not matter. 

[iacas]

4 minutes ago, boogielicious said:

Titleist is trying to protect their IP. They have every right to do that. Costco may be stealing that IP. They did not design the ball or spend millions on R&D. They are trying to make a quick buck on someone else's work. How would you like it if I stole your idea and made money off it? Size of the company does not matter. 

@Lihu are you again on the wrong side of an IP theft discussion?

[Lihu]

6 minutes ago, boogielicious said:

Titleist is trying to protect their IP. They have every right to do that. Costco may be stealing that IP. They did not design the ball or spend millions on R&D. They are trying to make a quick buck on someone else's work. How would you like it if I stole your idea and made money off it? Size of the company does not matter. 

All I was saying is that Titleist overcharges, and Costco is looking out for their customers.

No matter who you are your price needs to be competitive with the market. If you're the only company selling anything at 4 times everyone else, under normal circumstances, you'll likely go out of business. Titleist has been exempt from this price cutting for many years because of really great marketing. Seriously, a Snell Tour ball is just as good as a ProV1/x for half the price.

Also, if Titleist provides balls at let's say a bit less than half the price they currently charge to Costco, Costco would probably be selling their ball instead.

1 minute ago, iacas said:

@Lihu are you again on the wrong side of an IP theft discussion?

Nope. Nothing's been proven yet.

Edited March 21, 2017 by Lihu

[boogielicious]

6 minutes ago, Lihu said:

All I was saying is that Titleist overcharges, and Costco is looking out for their customers.

No matter who you are your price needs to be competitive with the market. If you're the only company selling anything at 4 times everyone else, under normal circumstances, you'll likely go out of business. Titleist has been exempt from this price cutting for many years because of really great marketing. Seriously, a Snell Tour ball is just as good as a ProV1/x for half the price.

Also, if Titleist provides balls at let's say a bit less than half the price they currently charge to Costco, Costco would probably be selling their ball instead.

Nope.

That is BS. Costco makes money by trimming the margins suppliers can have, underpaying their employees and using volume. They make shit-loads of money doing this. Titleist sells their balls at a price the market will support. If they were overpriced, less people would buy them. It is a premium product.

If Costco did violate the patent, or buy balls that did, they are stealing plain and simple.

Please don't act like they are Robin Hood.

[Lihu]

1 minute ago, boogielicious said:

That is BS. Costco makes money by trimming the margins suppliers can have, underpaying their employees and using volume. They make shit-loads of money doing this. Titleist sells their balls at a price the market will support. If they were overpriced, less people would buy them. It is a premium product.

If Costco did violate the patent, or buy balls that did, they are stealing plain and simple.

Do you know this for sure?

Your cussing is a definitive sign that I should probably back off this conversation, and sorry if you are offended by whatever it is we discussed? IDK what to say.

 

[DwightC]

Whoa.   Let's not accuse anybody of stealing anything.  Costco has filed a lawsuit (that's what a declaratory judgement is) to determine who's right here.  Thieves do not file lawsuits before they steal.

 Acushnet is going to have to defend that lawsuit.  Fine.  Acushnet had a right to assert claims based on its intellectual property in the letter it sent Costco that started all this.  By asserting its right it triggered litigation.  Presumably it took that risk into account.

If you go back and look at the Calloway Acushnet litigation over the ProV1, note that it was settled with a cross licensing agreement and no monetary payments, either way.  I've got no idea how this all plays out.

And nobody is bullying anybody.  Both of these companies have market caps in excess of $1-billion.  Acushnet may have a reputation for bullying smaller players in its space and all the wholesale clubs are notorious for squeezing their vendors, but so what?  If you're a vendor to Walmart or Costco, that's the deal you made with the Devil, and if you're a little guy in IP protected space, you knew all about intimidation by the bigger players when you stepped into the space.

[boogielicious]

Just now, Lihu said:

Do you know this for sure?

Your cussing is a definitive sign that I should probably back off this conversation, and sorry if you are offended by whatever it is we discussed? IDK what to say.

 

Bull. I know IP. I have patents. If you stole my idea, I would go after you. If Costco stole my idea, even though I work for a big company, I would be pissed and go after them. 

Titleist has spent decades designing, testing, and marketing their golf ball, which took millions of dollars in capital. Then someone comes along and buys a copy of their premium ball and sells it cheap and makes money off their ideas and hard work. Of course they should go after them.

It is stealing.

[boogielicious]

9 minutes ago, DwightC said:

Whoa.   Let's not accuse anybody of stealing anything.  Costco has filed a lawsuit (that's what a declaratory judgement is) to determine who's right here.  Thieves do not file lawsuits before they steal.

 Acushnet is going to have to defend that lawsuit.  Fine.  Acushnet had a right to assert claims based on its intellectual property in the letter it sent Costco that started all this.  By asserting its right it triggered litigation.  Presumably it took that risk into account.

If you go back and look at the Calloway Acushnet litigation over the ProV1, note that it was settled with a cross licensing agreement and no monetary payments, either way.  I've got no idea how this all plays out.

And nobody is bullying anybody.  Both of these companies have market caps in excess of $1-billion.  Acushnet may have a reputation for bullying smaller players in its space and all the wholesale clubs are notorious for squeezing their vendors, but so what?  If you're a vendor to Walmart or Costco, that's the deal you made with the Devil, and if you're a little guy in IP protected space, you knew all about intimidation by the bigger players when you stepped into the space.

I was not accusing anyone of anything necessarily. But if they did, Titleist has every right to go after them. Some are making Costco out to be Robin Hood fighting the evil tyrant Acushnet because they dare sell premium products at premium prices. I find that absurd. 

If people want to pay less for products, fine, don't buy Titleist or TaylorMade or Callaway. But don't make out premium producers as evil. If a retailer like Costco did knowingly buy balls that violated IP, they should be held accountable. If not, then they will win the suit.

[StevenR84]

There are a lot of "what ifs" here. Who bears the burden of proof? Acushnet? Hardly seems worth litigating over the market share amount (reference before by Snell, if that's accurate in the least bit). I don't know IP law but I do know there is a reason why patent trolls are getting paid all the time: Its really expensive to litigate patent cases. Didn't this ball originate out of a factory that makes balls for Taylormade? Why is the supplier of this ball not named as well? Both the supplier and Costco are making money off of it. 

 

But again, it's all what ifs. I even heard someone else saying that Titleist is mad over a breech of contract by Costco. Super hearsay so I don't believe a word until I see a filing but these are the directions this is going in. 

[Lihu]

43 minutes ago, boogielicious said:

I was not accusing anyone of anything necessarily. But if they did, Titleist has every right to go after them. Some are making Costco out to be Robin Hood fighting the evil tyrant Acushnet because they dare sell premium products at premium prices. I find that absurd. 

If people want to pay less for products, fine, don't buy Titleist or TaylorMade or Callaway. But don't make out premium producers as evil. If a retailer like Costco did knowingly buy balls that violated IP, they should be held accountable. If not, then they will win the suit.

You seem to be getting emotional over something that is very simple.

All I said was that Titleist charges too much for the current market situation. Many new companies like Snell, for instance, are selling their products at a much lower price. It's called a free market. When a company charges too much for something relative to other companies with similar quality, they will inevitably go out of business.

Like I stated many times in the past, I'm still a loyal Titleist customer.

I'm also a loyal Costco customer, and buy many things from them. I don't buy things at Costco because it's cheaper than everywhere else because it's not, I buy from them because they stand behind their customers. I can get things a lot cheaper than at Costco, but don't because there's good customer service at Costco (at least the three I frequent).

If I feel that something is worth the money, I spend it. If it's not worth it, I wouldn't even buy it at a severe price discount.

Edited March 21, 2017 by Lihu
Got two words reversed

[boogielicious]

1 hour ago, Lihu said:

You seem to be getting emotional over something that is very simple.

All I said was that Titleist charges too much for the current market situation. Many new companies like Snell, for instance, are selling their products at a much lower price. It's called a free market. When a company charges too much for something relative to other companies with similar quality, they will inevitably go out of business.

Like I stated many times in the past, I'm still a loyal Titleist customer.

I'm also a loyal Costco customer, and buy many things from them. I don't buy things at Costco because it's cheaper than everywhere else because it's not, I buy from them because they stand behind their customers. I can get things a lot cheaper than at Costco, but don't because there's good customer service at Costco (at least the three I frequent).

If I feel that something is worth the money, I spend it. If it's not worth it, I wouldn't even buy it at a severe price discount.

You are reading emotion where there is none. You also seem to condone IP infringement when it benefits your wallet.  That is a slippery slope to reside on.