Last year, Costco began selling golf balls. As the largest American membership-only warehouse club, Costco’s introduction of a new product such as a piece of sporting equipment would not ordinarily be noteworthy or otherwise unusual. Except that the balls became a bit of a cult phenomenon and flew off the shelves and the company completely sold out of the product by January. The golf balls are now selling for insane amount on Ebay. So what gives? The Costco balls are actually manufactured by South Korea’s Nassau Golf – the same company that manufactures TaylorMade golf balls. Nassau apparently unloaded some of its balls to Costco. Costco then branded the balls with a Kirkland Signature logo and sold them for $29.99 per TWO dozen. After golfers realized the balls’ performance was on par with some higher end balls, word began to spread and the rest is history.
While golfers may have been delighted with Costco’s venture into the golf ball industry, some golf ball manufacturers were not. According to a report from seattlepi.com, Acushnet, maker of Titleist golf balls, sent a cease and desist letter Costco earlier this year, alleging that the Costco balls infringed upon eleven of the company’s patents. In addition, Acushnet alleged that Costco had engaged in false advertising on account of the Kirkland Signature guarantee that all Kirkland products “will meet or exceed the quality standards of leading national brands.”
In response, Costco has filed a declaratory judgment action against Acushnet in the U.S. District Court for the Western District of Washington. As a preemptive strike, Costco seeks a judicial declaration that Costco was not violating Acushnet’s patents and has not engaged in false advertising. According to Costco, while others (including reviewers and golf professionals) have compared the Costco balls to the higher-end Titleist balls, Costco has never done so (at least not publicly).
In a written statement published by Golf World, Costco stated:
We have asked the Court to protect our right to continue to sell our Kirkland Signature golf ball against challenges made by Acushnet under patent and advertising laws. . . .The success of the ball with our members and the favorable comments it has received from reputable reviewers apparently have caused Acushnet to believe that our ball directly competes with the Titleist Pro V1 and Pro V1x balls. … Our golf ball will go back on sale in early April, but supplies are limited.
We here at Abnormal Use have never played with the Costco golf balls and, to be honest, with our golf games there would be no discernible differences found with an equipment change. Assuming that the balls actually live up to the hype, we understand why Acushnet may be upset with the competition. If Acushnet is really concerned about patents, however, we would think its real beef would be with Nassau who made the balls in the first place. But our best guess is that this matter is not really about patents at all. The real issue is that Acushnet does not want someone to undercut its premium price point. It is for this reason Acushnet has filed suit against a number of smaller companies who produce economy balls in the past. At least on the surface, it does not appear that Acushnet is concerned with companies like Nassau (a/k/a Taylor Made) who sell golf balls which compete at the same premium price point. Acushnet knows it has that marketplace cornered. But let someone sell a competing product for a percentage of the price, now Acushnet has a problem.
We are curious to see how this one plays out. We are hoping for quick resolution by April, so we can pick up a dozen of those Costco balls for the summer golf season.