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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.
But she didn't.
When elephants fight, it is the grass that suffers.
Prove anything by multiplying Huge Number times Tiny Number
If you read TFA you will see that "why we can't have nice things for cheap" refers to the tactic employed by large companies of threatening legal action against small competitors that those competitors can't afford to defend against, even if they are likely to win. It's a tactic that Acushnet has used before.
Did you read the article? It will never be known if Acushnet's patents are being violated, because they can use their legal might to force everyone else out of the golf ball business under threat of being forced out of business entirely.
Acushnet doesn't own 11 golf ball patents, it owns the high-end golf ball business. The free market can't solve this, because patents have eliminated the free market for golf balls. And that's why we can't have nice things for cheap.
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.
OK then, so they have a patent on each specific part of a golf ball, all layers patented separately, separate patent for the dimples, another one defining the size and shape of said dimples etc etc. I know the answer and the answer is because the US patent system is an absolute clusterfuck and just gathering and holding onto them so you can sue anyone who does anything remotely similar to shut down competition while crying free market. That's how you get at least 11 patents on a golf ball (are there more they aren't claiming are being infringed? Probably not but maybe).
Wanna buy a shirt?
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By both revenue and market cap, Costco is roughly 70-80x the size of the golf company. Costco's net income alone is higher than both Acushnet's revenue and their market cap. Costco has essentially unlimited resources available to fight any litigation, meaning this case will be decided on the merits if Costco wants it to be.
I saw a documentary about 10 years ago. Apparently Costco has it's own law-school too.
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.