In March I reported that Costco sues Acushnet regarding the popular Kirkland Signature golf ball. As you may recall, the Costco complaint states “[t]he need for such relief exists because Acushnet has wrongfully accused Costco of patent infringement and false advertising.” The following are some highlights from the complaint:

Costco is entitled to a declaratory judgment that it has not engaged in any false advertising in connection with the KS golf ball.

In addition, to the extent a consumer would interpret the Kirkland Signature guarantee in that manner, the statement is true. 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.

A reasonable consumer would not interpret the Kirkland Signature guarantee as intended to convey a statement of fact about any specific comparisons of quality between the KS ball and any specific manufacturer or ball, including Acushnet and its Pro V1 ball.

Acushnet asserts that the statement is intended to indicate to a reasonable consumer that the KS golf ball is the same or of greater quality as Acushnet’s Pro V1 golf ball.

Acushnet has accused Costco of false advertising based on its Kirkland Signature guarantee, which is not specific to the KS golf ball, and which states that Kirkland Signature products “meet or exceed the quality standards of leading national brands.”

Costco’s sales of the KS golf ball do not infringe any valid patent rights owned by Acushnet, including any valid patent claims identified by Acushnet in its correspondence. Accordingly, Costco respectfully requests that the Court issue a declaratory judgment confirming that Costco is not infringing any Acushnet patent rights as a result of its sale of the KS golf ball, including any valid patent claims identified by Acushnet. The specific patents identified by Acushnet are listed below. . . . XVI. REQUEST FOR DECLARATORY JUDGMENT CONCERNING CLAIM OF FALSE ADVERTISING

A justiciable controversy exists as to whether Costco is infringing any valid patent rights owned by Acushnet as a result of Costco’s sale of the KS golf ball or has engaged in any false advertising in connection with such golf ball.

In response to the popularity of the KS golf ball, Acushnet sent Costco a threatening letter, wrongfully accusing Costco of infringing 11 Acushnet patents based on its sale of the KS golf ball and engaging in false advertising based on its Kirkland Signature guarantee that all Kirkland Signature products “meet or exceed the quality standards of leading national brands.”

Costco is a membership-based retailer that is committed to bringing quality products to its members at low prices. In addition to selling name brand merchandise, Costco owns registered trademark rights to KIRKLAND SIGNATURE (“KS”), and sells a variety of items under that brand. In 2016, Costco introduced its KS golf ball, a golf ball that Costco sold at approximately $15 per dozen. The KS golf ball sold out quickly, and was praised by golfers and experts as a golf ball of tremendous quality and value. Many reviewers compared the KS golf ball to higher-priced “tour quality” golf balls sold by national brands, such as Titleist, Callaway, and TaylorMade. Even though the Costco KS golf ball has sold out, Costco plans to continue to sell the KS golf ball.

Acushnet has now filed their Answer containing responses with the usual denials and “without sufficient knowledge or information to form a belief as to the truth of the allegations,” riveting content. In the end, Acushnet requests: (A) That Costco’s Complaint be dismissed with prejudice and that Costco take nothing by way of its Complaint; and (B) That this Court award Acushnet Holdings its costs, expenses and attorneys’ fees incurred in its defense of this action.

It gets interesting in that on the same day, Acushnet also filed a separate suit against Costco alleging patent infringement of 10 golf ball patents & false advertising. Now we get to read Acushnet’s take on the situation. I have highlighted in red text some of the more interesting, or just entertaining, portions of the Complaint.



II. COSTCO’S KIRKLAND SIGNATURE GOLF BALL

21. Upon information and belief, Costco does not own or lease a golf ball manufacturing facility.

22. Upon information and belief, Costco does not own or lease a golf ball testing facility.

23. Upon information and belief, Costco does not employ any scientists, chemists, engineers nor technicians dedicated to golf ball innovation.

24. Upon information and belief, Costco began offering for sale in the United States a golf ball it calls its “Kirkland Signature Golf Ball” in or around October 2016. The Kirkland Signature Golf Ball is illustrated in the picture below:

25. The packaging of the Kirkland Signature Golf Ball indicates that the golf balls are manufactured in Korea.

26. The packaging of the Kirkland Signature Golf Ball indicates that “[e]very Kirkland Signature product is guaranteed to meet or exceed the quality standards of the leading national brands.” Costco refers to this statement as the “Kirkland Signature Guarantee” which was misquoted as “meet or exceed the quality standards of leading national brands” in Costco’s Complaint against Acushnet Holdings Corp. discussed below.

27. The Kirkland Signature Guarantee on the packaging of the Kirkland Signature Golf Ball is likely to communicate to a significant number of consumers a claim that the Kirkland Signature Golf Ball “meet[s] or exceed the quality standards” of Titleist® Pro V1® and Pro V1x® golf balls, i.e. the leading national brand of golf balls. Indeed, upon information and belief, the Kirkland Signature Guarantee on the packaging of the Kirkland Signature Golf Ball is intended to indicate such a claim to consumers.

28. Upon information and belief, Costco introduced the Kirkland Signature Golf Ball in an effort to draw business away from Acushnet Company, and used its Kirkland Signature Guarantee to convince purchasers and potential purchasers of golf ball products that they should purchase the Kirkland Signature Golf Ball instead of the Titleist® Pro V1® and Pro V1x® golf balls, the leading national brand of golf balls.

29. There are no professional golfers on the PGA Tour, the European Tour, the LGPA Tour, the WEB.COM tour, or the Champions Tour that used the Kirkland Signature Golf Ball in any tournament from January 1, 2017 through June 29, 2017.

III. ACUSHNET COMPANY’S EXTENSIVE TESTING ILLUSTRATES THAT ITS GOLF BALL PRODUCTS ARE SUPERIOR TO THE KIRKLAND SIGNATURE GOLF BALL

30. The essence of a good golf ball is one that travels far when hit with a driver or other club from the tee (i.e., it is “long off the tee”), that has high back spin when hit with irons, allowing the ball to stop on the green (i.e., it is “soft around the greens”), and that holds up when struck with a golf club many times (i.e., it is “durable”). The Titleist® Pro V1® and Pro V1x® golf balls have all of these characteristics and are demonstrably superior to the Kirkland Signature Golf Ball, despite Costco’s claim that its ball “meet[s] or exceed[s] the quality standards of the leading national brands.” Indeed, as discussed in greater detail below, Acushnet Company has performed testing that conclusively shows that Titleist® Pro V1® and Pro V1x® golf balls are superior to the Kirkland Signature Golf Ball in performance and durability, and thus that Costco’s Kirkland Signature Guarantee is false with respect to its golf ball products.

31. Upon information and belief, Costco did not perform any testing to support its claim that the Kirkland Signature Golf Ball “meet[s] or exceed[s] the quality standards” of the Titleist® Pro V1® and Pro V1x® golf balls, the leading national golf balls, prior to offering the Kirkland Signature Golf Ball to the public.

IV. THE TITLEIST® PRO V1® AND PRO V1X® GOLF BALLS PERFORM SIGNIFICANTLY BETTER THAN THE KIRKLAND SIGNATURE GOLF BALL

32. A well-recognized measure of performance of a premium golf ball is whether the ball is (1) long off the tee when hit with a driver and (2) soft around the greens when hit with irons, thus increasing scoring opportunities. In the head-to-head robot testing discussed below, the Kirkland Signature Golf Ball was shorter off the tee and had less back spin than the Titleist® Pro V1® and Pro V1x® golf balls. Thus, the Kirkland Signature Golf Ball did not perform as well as the Titleist® Pro V1® and Pro V1x® golf balls.

33. In the Fall of 2016, Acushnet Company tested the performance (i.e., distance and spin) of the Kirkland Signature Golf Ball and the Titleist® Pro V1® and Pro V1x® golf balls, using testing robots and protocols Acushnet Company regularly uses in the ordinary course of its business. The testing was performed by a robot that hit 36 samples of each type of ball with the following golf clubs: a driver at settings to hit the Pro V1 golf ball at speeds of 130 mph, 140 mph, 150 mph (average speeds of recreational players), and 167 mph (the average speed of a PGA Tour player); a 5 iron; an 8 iron; a full wedge; and a half wedge. For each hit with the drivers, the distance the ball traveled through the air (“carry”) and the total distance it traveled after rolling was measured. For each hit with the irons and wedges, the back spin of the ball was measured.

34. Distance Performance. The results of the distance tests for the Kirkland Signature Golf Ball and the Titleist® Pro V1® and Pro V1x® golf balls during Acushnet Company’s robot testing demonstrated that the Kirkland Signature Golf Ball travelled a shorter distance than both the Titleist® Pro V1® and Pro V1x® golf balls for 130 mph drives; that the Kirkland Signature Golf Ball travelled a shorter distance than both the Titleist® Pro V1® and Pro V1x® golf balls for 140 mph drives; that the Kirkland Signature Golf Ball travelled a shorter distance than both the Titleist® Pro V1® and Pro V1x® golf balls for 150 mph drives; and that the Kirkland Signature Golf Ball travelled a shorter distance than both the Titleist® Pro V1® and Pro V1x® golf balls for 167 mph drives.

35. Back Spin Performance. The results of the back spin tests for the Kirkland Signature Golf Ball and the Titleist® Pro V1® and Pro V1x® golf balls during Acushnet Company’s robot testing demonstrated that the Kirkland Signature Golf Ball had less back spin than both the Titleist® Pro V1® and Pro V1x® golf balls for 5 iron shots; that the Kirkland Signature Golf Ball had less back spin than both the Titleist® Pro V1® and Pro V1x® golf balls for 8 iron shots; that the Kirkland Signature Golf Ball had less back spin than both the Titleist® Pro V1® and Pro V1x® golf balls for full wedge shots; and that the Kirkland Signature Golf Ball had less back spin than both the Titleist® Pro V1® and Pro V1x® golf balls for half wedge shots. The performance testing discussed above illustrates that the Titleist® Pro V1® and Pro V1x® golf balls perform significantly better than the Kirkland Signature Golf Ball. Moreover, the performance testing discussed above establishes that the Kirkland Signature Golf Ball does not “meet or exceed the quality standards” of Titleist® Pro V1® and Pro V1x® golf balls, as Costco claims.

V. THE TITLEIST® PRO V1® AND PRO V1X® GOLF BALLS ARE SIGNIFICANTLY MORE DURABLE THAN THE KIRKLAND SIGNATURE GOLF BALL

36. One well-recognized measure of durability of a golf ball is whether it remains structurally sound when hit with a golf club many times. In the head-to-head testing discussed below, the Kirkland Signature Golf Ball was far less durable than the Titleist® Pro V1® and Pro V1x® golf balls. Indeed, over half of the Kirkland Signature Golf Balls tested by Acushnet Company cracked or became structurally unsound before the testing could even be concluded.

37. In the Fall of 2016, Acushnet Company tested the durability of the Kirkland Signature Golf Ball and the Titleist® Pro V1® and Pro V1x® golf balls, using a testing protocol Acushnet Company regularly uses in the ordinary course of its business. The testing was performed by a machine that hits each golf ball multiple times and records the coefficient of restitution for each hit. Thirty-six samples of each type of ball (Kirkland Signature, Pro V1®, and Pro V1x®) were tested. After each hit, the coefficient of restitution of the ball was measured in order to detect a failure. If a ball failed, the testing on that ball was concluded and the ball was inspected to determine the cause of the failure.

38. The testing of the Kirkland Signature Golf Ball samples revealed that 50% of the samples failed before the testing was three-quarters complete. According to Acushnet Company’s standard durability testing protocol, the testing machine stops a durability test if half of the samples fail. Thus, the testing of Kirkland Signature Golf Ball ceased before the testing was three-quarters complete. Inspection of the failed balls revealed that the first part of the ball to fail in the first failed ball was the inner cover. Of the 18 Kirkland Signature Golf Ball failures, 14 failures were due to defective inner covers and four failures were due to defective cores.

39. The results of the testing of the Titleist® Pro V1® and Pro V1x® golf balls are drastically different. Only two of the 36 Pro V1® samples failed. The remaining 34 samples did not fail. None of the Pro V1x® samples failed.

40. The durability testing discussed above illustrates that the Titleist® Pro V1® and Pro V1x® golf balls are significantly more durable, and thus much more likely to remain intact during a round of golf, than the Kirkland Signature Golf Ball. Indeed, the results are not even close; the Kirkland Signature Golf Ball is of substantially lower quality and durability than the Titleist® Pro V1® and Pro V1x® golf balls. Thus, the durability testing above illustrates that the Kirkland Signature Golf Ball does not “meet or exceed the quality standards” of Titleist® Pro V1® and Pro V1x® golf balls, as Costco claims.

VI. ACUSHNET’S LETTER AND COSTCO’S RESPONSE

41. On December 23, 2016, after Costco began offering its Kirkland Signature Golf Ball for sale in the United States, and after Acushnet Company performed the testing described above, Acushnet Company through its counsel sent a letter to Costco. The letter explained that the Kirkland Signature Ball infringes certain patents owned by Acushnet Company, including the patents asserted in this Complaint below. The letter also provided detailed exemplary claim charts illustrating that the Kirkland Signature Ball infringes the patents. Furthermore, the letter explained that Costco was making false advertising statements with respect to its Kirkland Signature Golf Ball, in particular with respect to the Kirkland Signature Guarantee.

42. Costco replied and asked that Acushnet Company wait until April 6, 2017 to allow Costco to respond. Costco also stated in its reply that it would not sell the Kirkland Signature Golf Ball during the period of the requested extension. In the interest of seeking to resolve the dispute without the need for litigation, Acushnet Company complied, and waited for Costco’s response.

43. To Acushnet Company’s surprise, on March 17, 2017, Costco filed a complaint in this Court seeking a declaratory judgment of non-infringement and invalidity of patent rights and seeking a declaration of no false advertising. Costco improperly named Acushnet Holdings Corporation (“Acushnet Holdings”), Acushnet Company’s parent holding corporation, as the defendant in its complaint. The case was assigned number 2:17-cv-423 (“the ‘423 Action”).

44. The ‘423 Action is improper because there is no case or controversy between Costco and Acushnet Holdings, as required for a declaratory judgment action. Acushnet Company, not Acushnet Holdings, sent the letter to Costco accusing it of patent infringement and false advertisement. Moreover, Acushnet Company owns the patents discussed in Acushnet Company’s letter to Costco and asserted in this Complaint, as indicated on the face of the patents and in the United States Patent & Trademark Office’s assignment records. As such, while Acushnet Holdings separately responded to Costco’s complaint, Acushnet Company files this Complaint to resolve the dispute between Costco and Acushnet Company.

45. Shortly after Costco filed the ‘423 Action, it indicated that it would resume sales of the Kirkland Signature Golf Ball. Upon information and belief, Costco did in fact resume importation into the United States and sales of the Kirkland Signature Golf Ball.

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COUNT XI: FALSE ADVERTISING (VIOLATION OF THE LANHAM ACT)

Acushnet Company repeats and re-alleges the allegations set forth in Paragraphs 1 through 128 as if fully set forth herein.

129. The packaging of the Kirkland Signature Golf Ball includes the “Kirkland Signature Guarantee” that claims that “[e]very Kirkland Signature product is guaranteed to meet or exceed the quality standards of the leading national brands.”

130. As shown above, Acushnet Company’s testing demonstrates conclusively that the Kirkland Signature Guarantee is false because the quality of the Kirkland Signature Golf Ball does not meet or exceed the quality of Acushnet Company’s leading national brand golf ball products, including Acushnet Company’s Titleist® Pro V1® and Pro V1x® golf balls. Indeed, the performance and durability of the Kirkland Signature Golf Ball is significantly lower than that of Acushnet Company’s Titleist® Pro V1® and Pro V1x® golf balls. Thus, Costco’s Kirkland Signature Guarantee is false and misleading.

131. Upon information and belief, Costco has not performed any testing or other studies comparing the Kirkland Signature Golf Ball to Acushnet Company’s leading national brand golf ball products, including Acushnet Company’s Titleist® Pro V1® and Pro V1x® golf balls. Thus, Costco has no reasonable basis to make its Kirkland Signature Guarantee.

132. Upon information and belief, Costco does not have or know of any robot testing comparing the Kirkland Signature Golf Ball to Acushnet Company’s leading national brand golf ball products, including Acushnet Company’s Titleist® Pro V1® and Pro V1x® golf balls, other than Acushnet Company’s tests discussed above. Thus, Costco has no reasonable basis to make its Kirkland Signature Guarantee.

133. Costco’s Kirkland Signature Guarantee is used in commercial advertisements and/or promotions in interstate commerce. For example, the statement is included on the packaging of the Kirkland Signature Golf Ball sold by Costco in multiple states within the United States.

134. Costco’s Kirkland Signature Guarantee is likely to mislead, confuse, and/or deceive a significant number of purchasers and potential purchasers of golf ball products. In particular, Costco’s Kirkland Signature Guarantee is likely to deceive such people in a material way, in that it is likely to influence the purchasing decisions of a significant number of purchasers and potential purchasers of golf ball products. For example, Costco’s Kirkland Signature Guarantee is likely to deceive a significant number of purchasers and potential purchasers of golf ball products into believing that the Kirkland Signature Golf Ball “meets or exceeds the quality standards” of Acushnet Company’s golf ball products, including Acushnet Company’s Titleist® Pro V1® and Pro V1x® golf balls.

135. Costco’s Kirkland Signature Guarantee is likely to cause competitive or commercial injury to Acushnet Company. For example, as a result of Costco’s Kirkland Signature Guarantee, a significant number of purchasers and potential purchasers of golf ball products will be deceived into believing that the Kirkland Signature Golf Ball is equivalent to the Titleist® Pro V1® and Pro V1x® golf balls. Thus, as a result of Costco’s Kirkland Signature Guarantee, Acushnet Company is likely to suffer irreparable damage to its business reputation and goodwill associated with Acushnet Company’s products. This damage to Acushnet Company’s business reputation and the goodwill associated with the industry leading quality of the Titleist® Pro V1® and Pro V1x® golf balls directly flows from Costco’s Kirkland Signature Guarantee.

136. Costco’s actions described above constitute false or misleading descriptions of fact, and/or false or misleading representations of fact in commercial advertising or promotion, which are likely to cause confusion, mistake and deception, in violation of Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a).