Costco faces lawsuit over hugely popular product
The warehouse club may not be able to keep selling the product line, which was an instant hit.
Costco always looks for unique ways to serve its members, and sometimes that means going well beyond its traditional lineup of household goods, clothing and groceries.
Not knowing what you might find when you enter a Costco (COST) - Get Free Report warehouse has become a key part of the company's business model. People may not join specifically for this treasure-hunt aspect, but they enjoy it as it makes visiting a warehouse to buy groceries or other mundane items a lot more fun.
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In recent years, Costco has also found ways to offer members high-end items at low prices. Sometimes that means looking at what's currently trending and knocking it off at a cheaper price.
One of the chain's most successful promotions has been selling golf balls. But those efforts led to legal problems with Titleist, which sued the warehouse club in 2017 over claims that it violated its patents.
Costco, it alleged, violated three of its patents to knock off its highest-priced golf balls and then sold them at a significantly lower price. The warehouse club countersued Titleist and the two parties eventually settled out of court.
Now, Costco faces another lawsuit over charges that its $499 Kirkland Signature Players Irons violate patents owned by TaylorMade. Image source: Shutterstock
Costco wants to make golf cheaper
Traditionally, big-name golf club manufacturers have a lot of pricing power. That's because golf has generally been a game largely played by people with money.
When you have to pay course fees or join a country club just to play the game, spending big money on equipment isn't that big a deal. Costco, however, wants to make golf affordable for its members.
TaylorMade, in particular, alleges that the iron’s design infringes on several patents tied to the company’s popular P790 iron, which has a similar hollow-cavity design.
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The warehouse club has targeted players of all skill levels.
"The Costco golf shop carries a wide variety of golf clubs to suit every skill level and budget, so you’re sure to find the perfect set of clubs," the company says on its website. "We have everything from women’s golf clubs to pitching wedges. Pick up a popular Kirkland Signature putter to improve your precision or a sleek titanium driver so you can propel the ball farther than ever before,"
That's not going to make Costco very popular with traditional golf manufacturers looking to sell premium products at top-tier prices.
TaylorMade, a premium golf club maker based in Carlsbad, Calif., has filed a lawsuit in U.S. District Court for the Southern District of California, alleging that Costco and its vendor, Southern California Design Co., have infringed on multiple patents tied to the P790 iron.
Costco faces a lawsuit charging patent violation
TaylorMade's lawsuit alleges that Southern California Design copies aspects of its P790 filled iron clubs. The company, which introduced the club in 2017, fills the cavity of the club with a special polymer it calls SpeedFoam.
“The accused products copy many features and technologies from TaylorMade’s P790 irons and the asserted patents. Costco’s website notes that the accused products ‘are built for distance and forgiveness with a stainless steel body, injected urethane insert, and an internal tungsten weight for optimal launch, forgiveness, and playability,'" according to the complaint, Golf.com reported.
Costco did not respond to a request for comment on the lawsuit.
The lawsuit also accuses the warehouse club of falsely advertising its clubs.
"Defendants’ false statements are material to purchasing decisions because they falsely or misleadingly suggest that the accused products have features found on premium clubs such as the Taylor Made P790," the suit alleges.
TaylorMade is seeking unspecified compensatory damages "to be proven at trial."
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