On November 15, 2021, Judges Edith Jones, Jerry Smith, and James Haynes of the United States Court of Appeals for the Fifth Circuit affirmed the dismissal of an antitrust complaint related to Topgolf International’s (“Topgolf”) acquisition of Protracer in 2016.  The complaint alleged that Topgolf acquired a technology owned by Protracer in order to drive its competitor, SureShot Golf Ventures (“SureShot”) out of business in violation of Section 1 and 2 of the Sherman Act.  SureShot Golf Ventures, Inc. vs. Topgolf International, Inc., 21-20132 (5th Cir. Nov. 15, 2021).  

Topgolf is a provider of interactive golf entertainment facilities in the United States.  SureShot sought to enter the market and attract customers away from TopGolf.  SureShot’s business model required technology from Protracer, with whom SureShot entered into a licensing agreement in April 2015.  The agreement had an initial five-year term that would automatically renew for another year unless either party gave advance notice of termination.  Topgolf acquired Protracer in May 2016.  According to SureShot, it met with TopGolf to seek assurances that it would continue to have access to SureShot’s technology, but a Topgolf executive stated:  “If I was in your position, I would look for alternatives.”  However, Topgolf did not terminate SureShot’s agreement with Protracer.  SureShot went out of business later in 2016.  SureShot asserted that it lost financial backing as a result of Topshot’s acquisition of Protracer.  

SureShot filed suit in 2017 alleging that Topgolf deliberately acquired Protracer in order to foreclose the market to SureShot and other competitors.  The district court initially dismissed the case holding that SureShot’s claims were not ripe and that SureShot failed to plead an antitrust injury because the alleged injuries were too speculative.  The Fifth Circuit affirmed.  SureShot filed a second lawsuit in May 2020 reiterating the same allegations.  However, SureShot claimed that the second lawsuit included new allegations regarding the automatic renewal term of the agreement and more specificity around the statement from an undisclosed Topgolf executive.  Topgolf moved to dismiss for lack of jurisdiction and failure to state a claim.  The district court granted Topgolf’s motion, concluding that SureShot had not asserted any additional facts demonstrating that SureShot’s relationship with Topgolf had changed.  

The Fifth Circuit agreed.  In addressing these claims, the Fifth Circuit concluded that it lacked subject matter jurisdiction.  The court found that there was no impending antitrust harm and that Topgolf had never explicitly stated that it would terminate SureShot’s licensing agreement with Protracer.  As a result, the claims were too speculative.  While SureShot attempted to remedy these issues in this second appeal, the Fifth Circuit agreed with the district court that no materially different facts were pled.  Accordingly, the court affirmed the dismissal for lack of subject matter jurisdiction.