A bitter fight brewing: Ethiopia and Starbucks clash over coffee

Some readers have complained that I don’t pay enough attention to issues surrounding intellectual property. And it’s certainly true that I’m not as focused on these issues as some friends are.

But every so often, IP in Africa makes the news. Alas, this story is not about the compulsory licensing of anti-retroviral drugs or physics textbooks. It’s about coffee.

Starbucks sells a lot of coffee. Some of their premium coffee is Ethiopian, featuring beans from the Sidamo, Harar and Yirgacheffe regions. Purchasing this coffee helps support Ethiopian coffee farmers… and in 2004, Oxfam worked with Starbucks to lessen poverty in coffee farming communities.

So it’s a bit of a surprise today to see Oxfam excoriating Starbucks for their relationship to Ethiopian coffee. The issue at hand isn’t pricing or the living conditions of farmers – it’s about trademarks and names.

Last year, the Ethiopian government filed trademark applications to protect the names “Sidamo”, “Harar” and “Yirgacheffe” – the hope was to prevent unscrupulous coffee dealers from buying inexpensive beans from other countries and selling them as “Sidamo”, whether or not they emerged from the region.

Unfortunately, the USPTO (US Patent and Trademark Office) rejected Ethiopia’s claims to these three names. Why?

…Ron Layton, head of Light Years IP, a Washington-based intellectual property rights organisation that is advising the Ethiopian government, said that in 2004 Starbucks had filed a trademark application with the word “Sidamo” to the USPTO. The USPTO then judged that Ethiopia’s application a year later had to be rejected because the word was already the subject of Starbucks’ application.

Right. Obviously Starbucks was using the word “Sidamo” to refer to coffee long before the coffee growers of Sidaro were. And a search for use of the Yirgacheffe name in US markets would obviously never find anyone using that mark previously. (That was sarcasm, for all the sarcasm impaired out there…)

It’s a little too easy to beat up on Starbucks for protecting intellectual property – if anything, people should be beating up US trademark law and the relentlessness of corporate America as a whole in protecting their brands. And just to be very clear – no one is accusing Starbucks of misrepresenting their coffee, calling a Columbian bean a Sidamo.

But Starbucks’s first response seems lame, at best. They suggest that trademarking their beans is a lousy strategy for the Ethiopian government to pursue – which may well be right. And they offer their willingness to work with the government on a coffee certification program… of course, they made this offer yesterday, as it became clear that Oxfam was going to take them to the woodshed. And they claim they didn’t block the trademark application. (They didn’t have to, if the explanation is that their prior application blocked the Ethiopian government’s application.)

Does it really make sense for Starbucks to try to protect these brands? Wouldn’t they get better press from withdrawing their applications and then working with Ethiopian coffee growers to build some sort of regional certification program?

Then again, Starbucks hasn’t shown a great deal of enthusiasm for extending operations into Ethiopia in the past. Ethiopian entrepeneur Tseday Asrat, a devoted Starbucks fan, attempted to open a Starbucks franchise in Addis Ababa – the company turned down her requests for a franchise, and she opened a Starbucks-inspired store called Kaldi’s. According to the New York Times:

Officials at the Starbucks Coffee Company were not thrilled when they learned about Kaldi’s. “Even where it may seem playful, this type of misappropriation of a company’s name (and reputation) is both derivative and dilutive of their trademark rights,” a company spokeswoman, Lara Wyss, said in an e-mail, adding that the company preferred to resolve such conflicts amicably.

To their credit, Starbucks didn’t sue. Perhaps they’ll find a way to resolve this conflict amicably as well.

The absurdity of the situation, as I read it, is the need for a very poor nation to protect “intellectual property” they’ve owned for centuries in an expensive foreign market. The coffee situation makes me think of the notorious “turmeric patent“, where Indian scientists and attorneys had to present ancient Sanskrit manuscripts to overturn a US patent that introduced the “novel” use of turmeric for wound healing, a process used for thousands of years in India. The patent was overturned, but it’s a huge barrier for poor countries to have to litigate bogus patents in US court.

(I’ve written at painful length about turmeric and other “indigenous IP rights issues” in the past on this blog…)

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17 Responses to A bitter fight brewing: Ethiopia and Starbucks clash over coffee

  1. bankelele says:

    I hope the WTO takes up this matter because poor nations are always going to be at a disadvantge by the time they wake up to IP issues. There’s a famous case in Kenya where the (swahili word) ‘kiondo’ which is what every Kenyan has always called/known as hand-made local basket is reputed to have been trade registered as a Japanse product.

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  3. Freeoromia says:

    I think Ethiopia’s row with Starbuck over naming coffee after the three growing area are legitimate and fair.
    In addition to the three coffee growing names waiting for patent,i.e. Sidamo, Yirgacheffe and Harar, indeed there are huge and original home for coffee which are left out by Ethiopia itself. These ones are found in Oromia Regional State’s Southwestern and Western zones. Names like “Coocee” the sources of the first coffee discovered perhaps giving us the vocabulary ‘coffee itself’, may be added to the patent claim. “cooce” is located in Jimma Zone of Oromia state. Other names like “Buna Wollaggaa” literally Wellega Coffee will be another name to be considered. The contestation is not merely limited to the ones between Ethiopia and Sarbucks. But the those Oromo local poulations also want their own representation and coffee to sell uder names of its original growing areas. I think Ethiopia should push ahead with more names like ‘cooce’ “Buna Wollagga” and “Buna Jimma” which are coffee names followed by localities because of Oromo language grammar;the point is there are contestations at loacal level over names as well.
    Ethan deserves an applause for writing on this kinds of intellectual property rights which are often overlooked because they are not of books, software, or other elecronic resources.

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  5. Steve says:

    Yeah it’s really easy for you in the safety of your home to write a blog about how great starbucks is and how terrible these poor ethiopians are.

    Yeah ok. Walk in their shoes for a lifetime and see what a huge difference another $88,000,000.00 would do for one of the poorest african countries.

    Yeah thats what it comes down to. Starbucks is a $6billon a year company that sells coffee and whom trademarks a name that they do not own nor will they ever own. God Bless America!

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  7. Ethan says:

    Uh, Steve – did you even read this blogpost? It takes quite a stretch of the imagination to turn me into a Starbucks enthusiast or a strong supporter of IP rights. I think the only pro-Starbucks thing I said here is “at least they didn’t sue.” I tried to actually address the IP issues in question, rather than parroting the “Starbucks bad, Ethiopians good” line that everyone else has taken on this story. Sorry you didn’t bother to read it.

  8. Danielle says:

    Just a couple quick things about the blog post/story. You mention that Ethiopia was trademarking these names so that unscrupulous people wouldn’t try to sell other coffees under these names. That’s part of it, but the main idea of the project goes far beyond identification of growing region. If all they wanted to do was to validate where they grew the coffee, it would make sense to do a certification program. The thing is that different types of intellectual property protection do different things. Certification marks or GIs would do nothing to give Ethiopia a better negotiating position as they sell their coffee. It would give no guarantee that more money would get to farmers. It would give them no real monetary incentive to build the reputation of their brand, because THEY would not have a brand. This would just lead to a higher retail price for the customer but no commensurate benefit to the people who actually produce the product.

    Also, even on the off chance that the Starbucks folks are right and this project will somehow harm Ethiopia (which requires a leap of logic that I’m not capable of making), it isn’t then up to Starbucks or the NCA (the trade group that starbucks convinced to oppose the trademark application on their behalf) to decide how Ethiopia should protect their property, it’s up to Ethiopia.

  9. Ethan says:

    Danielle, I don’t know enough about the economics of trademark protection to argue with you on the first point. Given the economic importance of coffee to Ethiopia, I’m guessing they’ve heard arguments from a variety of international experts as to certification versus trademarking and may be pursuing both strategies simultaneously. But the second point – that Ethiopia should be able to determine how to protect their own IP – was the one I was trying to make in the piece.

  10. Danielle says:

    Ethan,
    I didn’t mean to imply that you would have disagreed, more just saying as an extension first part of my comment that even if somehow Ethiopia could lose money by doing this that they should have the right to follow whichever path they choose. :-)

  11. Drewery says:

    The problem here is that Starbucks has already contacted the Ethiopian Government to try to set up programs (certifications and such) that would bring a better living condition to the coffee growers. They tried for years and it’s been the Ethiopian government that has rejected their efforts every time. If you read the Starbucks Corporate Social Responsibilty Report (http://www.starbucks.com/aboutus/csrannualreport.asp)
    the company is already, through it’s C.A.F.E. Practices efforts, paying premium prices for the coffee they purchase. If you read it you will find that part of C.A.F.E. practices not only secures that the farmers and cooperatives will receive a premium price for their participation in the program… but it rewards participants who provide environmental and social equity to it’s employees. Meaning the better the farms treat their workers, provide basic health care, and work toward using environmentally safe practices; the more Starbucks will pay them for the coffee. Bare in mind also.. Starbucks only purchases about 2-3% of the worlds coffee. And they pay on average 75% more than the market price for coffee to the coffee growers and/or cooperatives. Also they work with organizations like Conservation International (CI) and the Rainforest Alliance to help build sustainable and environmentally sound agricultural practices. If Starbucks decides to create a Black Apron Exclusive with a coffee from a particular region, not only do they pay a special premium price for it. But they grant $15,000 dollars to help fund social advancement efforts in the neighboring community. Yes, I’m a barista at a Starbucks store in Hampton, VA. So I have personal interest in this issue. Before going to work for them I did a lot of research into who they are and what their practices are. What I found was a company that for once in my working life actually holds true to it’s mission statement and principles. The paradox S’Bux has created for itself is that it doesn’t advertise it’s philanthropic and corporate responsibility practices. The reason it doesn’t do so (when most large companies do) is cuz if you think about it… ad campaigns cost a lot of money. Instead they actually put the money to work; continuing to pay premium prices on the market, providing between harvest financing for farmers, and of course providing competitive pay and benefits for their employees as well. They are one of the few, if not the only, company that offers health benefits to partners working a minimum of 20 hours a week. No employee in the company starts out at minimum wage. In my area it’s at least $1.75 over minimum wage as a starting barista. Which is rare in the service industry. The problem here isn’t that Starbucks doesn’t’ support the farmers. It’s that the Ethiopian Government wants to make money off of just merely having a trademark on set of names attached to the land they control. And it just strikes me as odd that when Starbucks offered to set up programs to pay the farms/cooperatives premium prices directly through certifications, they shot down the initiative, yet now they wanna charge money for the use of some names, and they claim to do it “for the farmers”. No. I doubt that. If the money were to be paid to the government(s) for right to use trademarks; after all the furnishing of the political officers spaces and padding of their wallets, how much of that would actually get to the farmers?
    It’s easy to just pick a “big” company and make them a scapegoat for your political agenda. It happens all the time and is becoming too much of a sick joke. In some cases, such as this, it’s just a means to play off of people’s ignorance of how the company actually is run. I mean it’s easy to assume that the “got big” by doing something “wrong” or unethical… but if you do the research I’m sure you’ll find that Starbucks with it’s commitment to Financial Transparency and Corporate Social Responsibility has become success only do to it’s ethics and it’s dedication to it’s stakeholders (coffer growers, partners[a.k.a. employees], and shareholders, etc.)

  12. Ethan says:

    Thanks for weighing in, Drewery. My goal was not to beat up on Starbucks in the way one of the commenters on this thread did – it was to point out that it’s a bad idea – PR-wise – for Starbucks to find themselves in this battle, and that it’s absurd that USPTO would allow anyone to register a commonly-used term like the names in question.

    While I appreciate your defense of your employer, it sounds like there is some controversy regarding Starbucks efforts in Ethiopia – Oxfam is also a group that researches situations quite carefully, and I noted that they’ve both worked with Starbucks in the past and have been willing to criticise the company in this case.

  13. Michael says:

    Ethan:

    Thanks for bringing attention to this issue. Notwithstanding the vibrant debate your post initiated, a few inaccuracies in your original piece have yet to be corrected.

    First, the name of the region in question is Sidamo, not Sidaro. I don’t typically make a practice of scouring blogs to correct spelling and punctuation errors, but since the root of this issue is the use of names of Ethiopia’s traditional coffee regions, it seems more important than usual to get the spelling right.

    Second, I would hate for your readers to think that the names “Sidamo” and “Yirgacheffe” only acquired value in the U.S. coffee market after Starbucks began marketing them by name. What makes the Ethiopian appeal in this case so uniquely resonant is that the names of its regions are ancient–by some estimates coffee has been cultivated in Ethiopia for as long as 6000 years. And that extraordinary heritage is evoked with every use of the terms “Sidamo,” “Yirgacheffe,” etc. These coffees were recognized and celebrated for their uniqueness in the specialty coffee industry long before Starbucks filed to trademark the words “Sun-Dried Shirkina Sidamo.” True, Starbucks has done more than any other company to mainstream specialty coffee in the United States through its marketing. And their promotion of Ethiopian origins added to their value in the marketplace. But the names of Ethiopia’s regions had currency long before Starbucks even existed.

    Finally, I am grateful to you for pointing out what I consider the “apartheid of Intellectual Property.” IP law systematically benefits companies who can afford the corporate legal fees necessary to use it to their advantage, and systematically discriminates against poor people who cannot, and indeed often do not even recognize the moral legitimacy or logic of the legal system on which IP law rests. So thank you for recognizing how surreal–and punitive–IP law looks when seen from the perspective of a barefoot coffee farmer in Ethiopia. But if that is the extent of your analysis, you miss the bigger point that Oxfam, at least, is trying to make–IP CAN work for the poor if traditional concepts of what constitutes “assets” evolve to recognize the value created by poor people overseas.

    I personally believe that this particular campaign is flawed–wrong mechanism aimed at the wrong target in the wrong way. But what Oxfam is trying to do is to put an end to apartheid–to creatively wrest the power of IP from corporate lawyers and lawmakers to put it to work for the poor.

    Michael

  14. Ethan says:

    I’ve fixed the misspelling, Michael – sorry about that and thanks for the fix. As for the point about the names being used for thousands of years prior to Starbucks’ use of the names… I’d thought that was clear in the piece, but perhaps my sarcasm and snark isn’t always crystal clear. I’ve added a note to that effect.

  15. zafu_zembel says:

    Drewery,

    Philanthropy is no exchange for fair trade. What Starbucks is afraid of is losing its ability to dictate prices. Paying slightly above commodity prices for premium coffee doesn’t equal premium prices. A consolidated supplier is able to negotiate prices on a more equal footing.

    What the world of coffee growers is perhaps some type of a coffee producer’s cartel. Limit the supply and increase the prices. The policies of Export led growth have made many non coffee growers to switch to coffee growing, increasing supply and depressing the prices. Add to that the loss of ownership of the beans, then farmers are made not to even afford the basic necessities of life. It is outrageous.

    Of course if your research of Starbucks is limited to Starbucks.com, then you would think we should handover the world to them.

    Please quit patronizing Africans saying “oh but we built a road here, a bridge there…but, but we gave you $15000” etc.

  16. zafu_zembel says:

    Correction from above…

    What the world of coffee growers needs is perhaps some type of a coffee producer’s cartel.

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