Costco Case Analysis: "A bold ask in the world of golf ball patents, especially where Acushnet is concerned."

Mike Stachura and Mike Johnson try to consider what Costco aims to achieve in filing a lawsuit against Acushnet over patents, especially since they note the effort is to invalidate the works of a company known to vigorously defend their patents.

Reading the reporting by Stachura and Johnson, it's hard not to wonder if the case was started in part as a publicity plot, especially with a new version of the ball likely coming soon. However, the risks and costs in such a legal battle would suggest such a move merely to sell some golf balls could backfire for Costco.

Acushnet was asked for comment in an analysts call an declined.

"You know based on past experience that we never comment on the competition, and as you would expect, we don't comment on any outstanding litigation," he answered to one analyst's specific question about the impact of the Kirkland Signature ball. "We do respect the fact that you're going to ask questions of a competitive nature and of a litigious nature and hopefully catch us at a weak moment, but we'll take a pass on both of those."

This analysis from a legal expert suggests Costco made a bold and shrewd move in the approach to its filing.

“It’s a problem for the alleged infringer if the patent holder doesn’t sue them, so this does two things,” said Rochelle C. Dreyfuss, the Pauline Newman Professor of Law at New York University School of Law. “It accelerates the lawsuit, which sometimes the alleged infringer wants, and it also gives the alleged infringer a choice of court.”

Johnson and Stachura draw this conclusion that I'd agree with, except for the buzz and store traffic likely increased by the Costco ball craze.

For all the media hype and the cult-like status afforded the Kirkland Signature ball, fact is its contribution to Costco’s bottom line is likely no more than an accounting rounding error due to its inability to produce more than limited quantities of the ball.