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A Lawsuit Over Costco Golf Balls Shows Why We Can't Have Nice Things For Cheap (qz.com)
Ephrat Livni, writing for Quartz: Unless you're a golfer, you probably don't think about golf balls. But a new US lawsuit about these little-dimpled spheres has an economics lesson for all shoppers, showing why consumers have cause for concern when companies use court for sport. Costco, the wholesale membership club, rocked the golf world in 2016 when it started selling its Kirkland Signature (KS) golf balls at about $15 per dozen, a quarter to a third the price of popular top-ranked balls. Industry insiders called it a "miracle golf ball" for its great performance and low cost, and Costco sold out immediately. It's planning to release more in April. In response to the bargain ball's reception, however, Acushnet -- which makes the popular Titleist balls -- sent the membership club a threatening letter. It accused Costco of infringing on 11 patents and engaging in false advertising for claiming that KS balls meet or exceed the quality standards of leading national brands.
Those who can, do.
Those who can't, sue.
It's not like this is anything new.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
insert caddyshack joke here
No, it doesn't. This is actual, physical "stuff" which has been invented, not gauzy ideas.
If these balls actually violate the 11 Acushnet patents (and they're in force), then it's right and good for Acushnet to ban Costco from selling them.
(And that's ignoring whether or not the claims of false advertising, which would mean that they wouldn't be nice in the first place.)
"I don't know, therefore Aliens" Wafflebox1
There are other decent balls in the $20-25/box category. Those who lose a lot of balls will be hurt by the difference in price, but then again, it probably doesn't matter what brand of balls those golfers use. Might as well buy cheapest ones because half of them are going into the woods.
In a legal battle with Acushnet.
Been going on in the tech industry for decades.
Please erase this type of thinking from your head. If I want to manufacture a product for $10 and sell it for $5, I am completely within my rights to do so. It's not smart, but being stupid isn't a legal crime. How do you know that the non Costco isn't made by child labor elsewhere? Costco may sell the golf balls at a loss, but then make up for it for that other $200 worth of crap that people put in their cart they didn't need.
They published why they don't infringe.
http://golf-patents.com/wp-content/uploads/2017/03/20170317-Complaint-Costco-v-Acushnet.pdf
That should give the other side pretty good visability as to what their options are.
Will be interesting to see what they do next.
If Costco did their homework, then maybe the dreaded golf ball triopoly is dad.
Oh, it's sooo exciting just can't wait to see what happens next.
Actually, it can be a crime. There's a whole concept of Dumping. It usually applies in the case of international trade, but can apply domestically as well. Generally it's used to drive competition out of business when they can't sustain the lower price.
Dumping
I got your dimpled balls right here.
You are welcome on my lawn.
In order to have a "gauzy" idea, that idea must be encoded in some arrangement of "physical" phenomena. EVERYTHING is physical.
This is typical entitled behavior for corporations. "WHAAAAAAAHHHHHH! But I deseeeeeeeerve to make a bunch of money." Meanwhile, poor people who like to not starve or die from lack of health care are derided as entitled. This is bullshit. The only entitled people out there are the patent trolls and goobers like Titleist.
These days, almost every single small consumer product is made in China or similar countries. Factories turn out the same electronics for Apple, Lenovo, Dell, etc. and the only differentiation is the case and branding. It wouldn't surprise me if there were one or two massive golf ball factories turning out millions of balls a month, and just slapping the Titleist or Nike or Kirkland Signature logo on a slightly differentiated design. This happens a lot in electronics too -- Cisco's contract manufacturers sell non-official Cisco gear all the time at a cut-rate price; same exact specs but no support if Cisco finds out.
In the consumer space, this reminds me of businesses like Dollar Shave Club or similar. If you buy fancy razors and razor blades from Gillette or Schick or whatever, you'll pay insane prices even in bulk for an extremely basic consumer good. The question is whether or not the cheaper substitute good really is directly stealing patented designs. Companies do have to make money back on their research -- I guess the question is how much of a golf ball design really is a trade secret.
It also speaks volumes about the "power of brands." People will happily pay Apple multiples of what their devices are worth just to have an Apple product. BMW owners pay through the nose for their cars, then pay through the nose again to get them fixed just because they're proprietary and expensive. I don't really care where my razor blades or golf balls come from, but I'm sure there are rabid Titleist fans out there too who would never be caught dead with Costco balls. I'm actually surprised that there's a market for cheap golf balls given how much disposable income you need to have to play golf these days. You need to belong to a country club, buy thousands of dollars worth of equipment, and have hours of free time at your disposal, something most people don't have.
The cost of making the Costco golf balls and the Acushnet balls is probably similar. Acushnet spends a lot of money on advertising and gives a lot of its product to professional golfers so they're going to cost more to those who actually pay for them.
In a time of universal deceit, telling the truth is a revolutionary act. George Orwell
I'm surprised there are still patents that matter for golf balls, let alone 11 of them. I would have thought that was a solved problem some 20 years ago and that anything new that still fit tournament regulations on golf balls was gimmicks and snake oil.
This won't be like before, when the manufacturer sent threatening letters and forced smaller manufacturers to either go to court of get out of the business entirely. Costco is suing, and now Acushnet Holdings has to either prove their claims or fold. Same as IBM and Novell when SCO made similar bad noises about patent infringement, the big boys can't afford to let someone slander them.
Any bets that another patent troll is going to get a kick in the balls?
"Transparent" is a shit show that trades on every stereotype going. A man in drag is NOT a transsexual.
The real question is WHY is this an article on Slashdot?
Except when there is industry collusion to keep prices inflated. The golf industry is ABSOLUTELY big on that. Golf balls are incredibly cheap to make and Titleist knows their balls are not worth what they sell them for.
Do not look at laser with remaining good eye.
Actually, it can be a crime. There's a whole concept of Dumping. It usually applies in the case of international trade, but can apply domestically as well. Generally it's used to drive competition out of business when they can't sustain the lower price.
Dumping
He said being stupid isn't a crime.
Wanna buy a shirt?
https://www.redbubble.com/people/stealthfinger/shop?asc=u
It's a fucking ball with some dents in it. The questions you should be asking are, "why the hell are they so expensive?" and, "how the hell do you get (at least) 11 patents on a fucking ball?"
I'm actually surprised that there's a market for cheap golf balls given how much disposable income you need to have to play golf these days. You need to belong to a country club, buy thousands of dollars worth of equipment
Not really: you can buy relatively good clubs (non-pro of course) for a few hundred dollars, and there are plenty of golf courses that don't require club membership. You can play a round for less than $50 on some decent courses. They're not quite PGA-level, but then again if you aren't going to spend a ton of money you probably aren't at the skill level that would require.
Costco's products tend to be cheap because they have policies on limiting markup (Kirkland products have a 15% markup, third party products are 8-10%). They can afford to do this because their membership fees cover their corporate overhead.
Costco's no dummy.. also they are know for taking cases all the way to SCOTUS. Sueing them could get very expensive for the gold company very fast.
sure they are. if they got a state-enforced monopoly on their production and importation then, for the duration of that granted monopoly, they're worth (in that state) whatever they can sell them for.
"They were pure niggers." – Noam Chomsky
Technicality question on advertising and legalities around their verbiage. It's been a while, but I thought when somebody uses the phrase "Leading National Brand" it means absolutely nothing in court. In other words, they can always say they are better than the leading national brand, because there is no definite requirement for who is "leading". Leading might mean their 5 year old son who sells golf balls he found in the ditch outside.
Some other gotchas I remember are "Best", "Number 1", and crap like that. Anything that can't be pinned down to a definite thing, like a dollar amount or percentage, will get by with advertising whatever. Even stuff like water-proof can get by with judges as long as it is way better than typical products that are listed as "water resistant" even though the water-proof stuff might not be 100%.
My town has a city-owned golf course (not uncommon). This course was a private course that was struggling and the city purchased it a couple of decades ago.
Greens fees are about $20.
So, patents do expire, right? Companies can't do this forever, right? Eventually after the 20 year time expires we can get nice things for cheap, right? Somebody...
You can play golf with a $110 set of clubs (which you can probably find cheaper used) at a public course for $20 to $40 a round, if you walk rather than rent a cart. If you want, you can buy some golf shoes, but they're not required. It does not require thousands of dollars nor membership in a country club.
So.. what did you find out?
Oh. You didn't even try. Are you sure that was your "real question?"
Probably because of techniques to manufacture the raw materials for the core, techniques to wind the core, techniques to develop the material for the casing, techniques to actual extrude or cast that casing, and the design that went into the the dimple pattern itself.
Now, I'm not saying that all of these kinds of patents should be valid, but I can see how work went into each of these steps, and how a company that has spent the time and money developing these steps would want to do what they could to protect their interest in what they've paid to develop.
There may be some latitude for another manufacturer though. If you look at automotive design you can see how most cars tend to follow trends. Boxy versus curvaceous, certain kinds of bulges in fenders and quarter panels, certain kinds of wheel opening arches, windshield angles, C-pillar design, etc. Most cars tend to be similar to other cars in a given class for a given year range, and historically this has not been too problematical. It could well be that Costco's design is similar to Titleist, but not identical enough to be a problem, but if Titleist chooses to sue then it'll be up to the court and the appeals process to decide.
Do not look into laser with remaining eye.
From TFA: "Companies with deep pockets lock down the market by making it too expensive for competitors to operate and to offer lower-priced yet quality products. It is a legitimate tactic; even those who succumb to it don’t really begrudge the approach."
If this is a "legitimate tactic", the so-called Free Market is seriously fubar'd.
Never let a lack of data get in the way of a good rant.
Patent law. Same reason you see random giraffe stories on the news now. I mean April the forever pregnant Giraffe is so topical that news agencies automatically rank up AP wire stories about any giraffe in a desperate attempt to lure viewers in.
What if we need that extra push over the cliff, you know what we do?
Put it up to eleven.
It is not that we can not have nice things, it's we can't have nice things and not pay for it. Plus there is that pesky thing called a patent to take into account.
Yet another reason why I don't give a fuck about this world.
To bring this type of lawsuit to court, I'll give them that.
In my area it's the exact opposite. They use tax dollars to build something, mismanage it horribly, then sell it for pennies on the dollar to their buddies because it is "failing". It's a great way for politicians to transfer public money to their friends.
Enigma
I look out the window of my building from my cubicle and see a little sliver of Grant Park on Chicago's lake front to the south. On the other side of Grant Park lies Soldier's Field and McCormick Place.
McCormick Place is named after "Colonel" Robert McCormick, staunch anti FDR Republican and owner of the Chicago Tribune. Colonel McCormick was one of the heirs of the fortune made by Cyrus McCormick selling the McCormick reaper.
The reaper was patented. Obed Hussey had patented a reaper as well. They fought in court over the patents, but both were sold for many years under the separate patents. Obed ended up with the "most" ownership of the design, but they were not exactly alike.
Think about the old saying: "Build a better mouse trap, and the world will beat a path to your door."
As a matter of fact, Massey Ferguson, John Deere, Alice Chalmers and many others made reapers, harvesters, tillers, bailers and many more patented farm equipment. Each performed the same functions, but each did it in a slightly different way. They each were building better mouse traps, not the same one. The US constitution supports patents in section 8:
"To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries."
The purpose must be to promote, not hinder, the "Progress of Science" and "useful Arts". Temporary, and exclusive, rights "to their respective" creations are granted. Not all creations that perform the same function are protected against, but the ones that do it the way you made it work. If someone else makes a golf ball that is different than your golf ball, they get their patent and you get yours. In this way the 'useful Arts' are promoted. "Build a better golf ball and the golfers will beat a path to your door" has become "and the lawyers will beat a path to the Court."
We have come almost 180 (degrees) in patent law from the simple language of the Constitution. Patents should protect an individual, specific design, and those very close to that specific design. However, they should not hinder novel designs. That would be against what the constitution authorizes. Also they must be time limited, or innovation will be destroyed. Manufacturers often tweak products and file for a new patents, then use the current broad, not specific, reach of patent law to hinder innovative competition.
The current interpretation of patent, and copyright, law clearly is in opposition to the clear language of the constitution. We arrived at where we are through multiple small steps, small interpretations of the law that have us now applying laws that grant broad reaching and almost never ending rights. The current state of the law, as interpreted through the lens of many years of collective case law, hinders innovation, competition and free enterprise.
A robotic arm could hit a ball 10 times and they'd all end up in different spots.
Seriously. I mean, you can play golf on the cheap, but how many really do? The nicest courses are the expensive courses. Golfers love to spend Big Bux on top end clubs, balls, and gadgets in endless variety. How much does this lower their scores? Maybe a fraction, but I guarantee you, the average golfer has equipment way above their skill level.
Bottom line is, Acushnet is protecting a very tidy and profitable business with litigation. They don't want Costco/Walmart/Dollar Store horning in on their fat profit margins and they will seek out conflict if it can advance their business interests. Regardless of merit.
The booming business in recycled golf balls alone is proof of the fat profits to be found in golf.
no mod points available
Costco could just rip off 1980s golf ball tech, those patents will have expired by now. No patent royalties required. slashdot does seem to have an anti patent bias.
They shot themselves in the foot by filing for Declaratory Judgement of invalidity. Now they cannot launch invalidity proceedings at the patent office, where they would have a much greater likelihood of success of winning.
OMG, I was rolling on the floor laughing at this article and I found a lost Titleist ball!
you make up a statistically useless sample size that no one uses and are telling us it won't work. what is your point exactly? I mean, speaking of building a new terminal at ohare in chicago wouldn't work - landing a plane on top of a car would crush the car.
And Scoth was demonstrating why it should be.
APK quotes people (including myself) without context and should not be trusted. Just thought you should know.
I believe this is a case of "Waaah, Costco pushed us off the gravy train!"
wha'? where am i?
BMW owners pay through the nose for their cars, then pay through the nose again to get them fixed just because they're proprietary and expensive.
Have things changes in the last couple of generations of BMWs? I have an '02 e46 and it is pretty dead simple to work on and maintain. The most proprietary thing I have dealt with was the PVC system when I switched it out from the warm weather one to the cold weather on and the worst part there was getting it positioned without removing the intake manifold. The brakes are dead simple to change pads and rotors and doing a fluid flush on them is simple. Changing belts, spark plugs, filters, and consumable sensors (looking at you o2 sensors) is simple as well. Even changing out the fluid in the diff and transmission is exceptionally simple (you mean I don't have to drop a fucking pan or take off a cover and then smear everything with black RTV silicone). My only real beefs are with the coolant systems and their shitty hose connections (god these are a bitch to get off when you change hoses) and that even shittier plastic pressurized expansion tank and the window regulators. The design of the OEM window regulators on the e46 cars really sucks but they are easy enough to change out and only take about 30 minutes to do correctly. They do have that canister filter which took some figuring out the first time I changed oil on one (several cars ago) because I was looking for the standard can filter that I was use to. Granted on a 15 year old vehicle with just under 200,000 miles on it you have other problems like sensor failures (had to replace a cam position sensor) but even that is simple and only takes a few minutes and I haven't had many of them.
Getting things done at the dealership is just asking to get bent over. I had one window decide it wanted to live at the bottom of the door and it looked like it was going to rain so I went to the dealer. I ask how much it would cost the dealer to do and they gave me some stupid quote and said most of it was the 1.5 hours of labor. I told them that I could direct my 6 year old to do it in under an hour. I made it home before the rain. My 6 year old wanted to fix it so I directed him on how to do it and it took him about 50 minutes and that includes not having the right tool for popping off the inner door panel and instead wrapping a slotted screw drive in electrical tape.
Time to offend someone
The reason Costco sells them cheap is because they deal in volume - instead of making balls in hundreds of thousands, they can make balls by the millions, extracting mass production cost benefits.
And because they were partnered up with another company who designed the balls, they got a good quality ball, made quite cheaply in volumes that out-do the other manufacturers since Costco does stuff in bulk.
Apparently the golf balls in question are a OEM ball manufactured by Nassau Golf Company (located in South Korea). Nassau has also sold OEM golf balls to TaylorMade (a golf equipment subsidiary of Adidas). Although I suspect nobody knows for sure, the word on the street was it manufacturing over-run which is unlikely to be repeated.
The interesting thing that most folks are missing is that Costco is pre-emptively suing Acushnet (the seller of Titleist balls) seeking declartory judgement (yes, Costco is doing the suing) in response to a lawyer letter sent by Acushnet. This is mostly because they need to defend the tag line "meet or exceed the quality standards of leading national brands" of their Kirkland branded products, not because they want to sell more golf balls (although they probably do, it's not the main reason for their lawsuit). They want to establish a legal precedent that they can use this tag line in the rest of their business to deter future lawsuits on this basis.
For what it's worth, the Gillette Shave Club offers a cheaper product than the Dollar Shave Club, trying to undercut them (until they sue them out of business). Same subscription service though.
Your ad here. Ask me how!
However it sounds like bollocks for someone to have a patent on dimples or anything else in a golf ball. While quality, patterns and materials may vary causing some balls to be better than others, the general form and function of golf ball has more or less gone unchanged in the last 40 years.
Opportunist may be right. He said:
Those who can, do.
Those who can't, sue.
Titleist makes world-class balls. Costco is suing. So by his logic Titleist can (and does), Costco can't do the R&D, so they sue to rip of. Titleist's R&D. That may be right.
Um, their membership fees are a drop in the bucket compared with the amount of stuff people buy annually. That doesn't begin to cover corporate overhead.
Just another day in Paradise
Costco's profit is the membership fees not overhead. Easy to confirm too.
2016 profit 2.35 billion.
Membership count about 44 million in 2015, I didn't look for 2016 numbers, but close enough.
2.35 billion/44million = ~$53.
Yearly price of a Costco membership $50 or $100.
Billions of dollars in membership fees are not a drop in the bucket: the entirety of Costco's multi-billion profit comes from their membership fees, which allows the rest of the business to basically operate at-cost.
About $199 new from Costco, when I bought mine many years ago. Not sure what the current Costco sets run.
And, you can get a custom built set from Monark Golf for about $350. Pick your own knock off gold head, shafts, and grips and the desired length. Which is nice if you are shorter or taller than average. Funny when people are paying thousands for custom name brand clubs.
Profit != Corporate overhead
Their membership is over 85 million globally. Membership fee revenue climbed 3.6% to $603 million
Oh, and their profits dropped considerably in '16.
Just another day in Paradise
Billions? Membership fee revenue climbed 3.6% to $603 million
Source: Motley Fool
Just another day in Paradise
Per quarter. Multiply roughly by four to get annual. For Q2 2017, Motley Fool reports $636 million in membership fees and $515 million in net income.
I'll never quite understand why people make stuff up out of thin air, then proceed to "correct" those who actually have the facts. Here's the complaint initiating the suit:
http://golf-patents.com/wp-con...
You may notice right on the top of the page:
COSTCO WHOLESALE
CORPORATION, a Washington
corporation,
Plaintiff,
v.
ACUSHNET HOLDINGS CORP., a
Delaware corporation,
Defendant.
"Plaintiff" means "the person who is suing". Defendant means "the person who is getting sued".
Plus the engineering that goes into German cars is light years ahead of those peices of shit the Americans crank out, where the things are literally falling apart in a couple of years and only the cheapest materials are used.
Cadillac vs 7 Series ???? Not even in the same ballpark. There is a reason why high end Euros are desired all around the world, while American cars only appeal to Anericans with no money.
It's written in such an odd typeface I thought it was Fitleist. I thought it was some golfer's name. How do you pronouce Titleist anyways?
Tit. Leisst? Tit. Least? Title. Ist?
Q: How many lawyers does it take to change a light bulb?
A': It only takes one to change YOUR bulb...to HIS.
The original purpose of patents was to give rights to produce to the royalty's friends. Since our modern royalty are lawyers, it is somehow appropriate. Don't bother outproducing, just make a bunch of patents (the more obvious the better, so long as you convince your lawyer friends in the patent office to accept the claims) and throw laywers at it. Cell phones with rounded edges. Golf balls with dimples.
As an aside, I fully expect that if space aliens ever visit us, the first contact will be their lawyers claiming that they have a patent on agriculture and we owe them 10k years of back royalty payments.
"...and engaging in false advertising for claiming that KS balls meet or exceed the quality standards of leading national brands." So, in this, they admit that their KS balls are actually inferior to others. HA! :D
"Remember, no matter where you go, there you are." -- Dr. Buckaroo Bonzai, PhD
I was talking more about the line "If I want to manufacture a product for $10 and sell it for $5, I am completely within my rights to do so." Depending on the circumstances, he may well not be within his rights to do so.