The U.S. Court of Appeals for the Fifth Circuit has rejected an antitrust action filed against Dallas-based Topgolf International alleging the company attempted to monopolize the golf entertainment center business when it purchased a 3-D ball-tracking system that analyzes the shots golfers take on driving ranges.
SureShot Golf Ventures v. Topgolf International pits Topgolf, which was founded in 2000 and operates golf entertainment centers in the United States and abroad, against SureShot, another Texas-based company formed in 2014 in hopes of competing with Topgolf by opening a golf-focused sports bar entertainment facilities.
To create competition with Topgolf, SureShot relied on ball-tracking technology from Protracer, a Swedish company that developed a three-dimensional gaming experience that allows golfers to track the flights of multiple balls in near real time on a television monitor, according to the court.
SureShot has a five-year licensing agreement with Protracer for the ball-tracking system, which expires in 2020. SureShot alleges that Topgolf used its position as a monopolist to acquire Protracer technology with the intent to foreclose the market to SureShot and other competitors.
After Topgolf’s acquisition, SureShot sought assurances from Topgolf’s executives that they could continue to access the ball-tracking system beyond the expiration of the licensing agreement. Topgolf refused to give such assurances, and allegedly one of its executives told SureShot, “If I was in your position, I would look for alternatives.”
SureShot then sued Topgolf in the U.S. District Court in Houston in 2017, asserting several antitrust claims, including conspiracy in trade and monopolization and attempted monopolization under the Sherman Act, and unlawful acquisition under the Clayton Act.
Topgolf sought to dismiss SureShot’s complaint for failure to state a claim. Topgolf argued that SureShot’s claims were not ripe for resolution because the company still had access to the ball-tracking system and SureShot did not adequately allege that Topgolf’s acquisition was illegal or resulted in anti-competitive effects.
The trial court granted Topgolf’s motion to dismiss, concluding that SureShot’s claims were not ripe for consideration and that SureShot failed to plead antitrust injury sufficient to confer antitrust standing, decisions SureShot appealed to the Fifth Circuit.
In its recent decision, the Fifth Circuit affirmed the dismissal, concluding that the antitrust claims against Topgolf are ambiguous and that SureShot’s alleged injury is not “certainly impending.”
“The closest Topgolf came to denying future use of the Protracer technology was the statement of its unnamed top executive who advised SureShot to seek alternative ball-tracking technology in developing its business, which did not immediately terminate the SureShot/Protracer agreement,” the Fifth Circuit panel wrote in a per curiam opinion.
“SureShot’s claims of market foreclosure stemming from the Topgolf/Protracer acquisition are similarly speculative. SureShot alleges that Topgolf’s acquisition of the Protracer Range System would ‘cut off the supply to SureShot of the unique, leading-edge Protracer technology,’ give Topgolf control over licensing agreements, and authorize it to extend agreements to businesses interested in using the Protracer technology to open businesses other than golf entertainment facilities, thereby controlling prices and sending less qualified personnel for installation and service requests,” the Fifth Circuit wrote.
“However, all of the allegations SureShot identifies for us are phrased in future terms, and SureShot has not alleged that any of the federal antitrust violations have resulted in the above-referenced feared actions,” the Fifth Circuit concluded in the decision.
Ashley E. Johnson, of counsel in the Dallas office of Gibson, Dunn & Crutcher, who represents Topgolf on appeal, did not return a call for comment.
Mo Taherzadeh, a Houston attorney who represents SureShot on appeal, also did not return a call for comment.