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Friday, December 1, 2006
Wednesday, November 15, 2006
Starbucks and Ethiopia dispute over trademark
Starbucks' prescription for Ethiopia: GI certification or chat
By Wondwossen Mezlekia, Seattle
www.ethiomedia.com
Novemeber 13, 2006
--------------------------------------------------------------------------------
Ethiopia, the birthplace of coffee, and Starbucks, the world’s Specialty coffee giant, dominated headlines of the major media outlets in an uncanny coming together. The controversy over Ethiopia’s trademark application for its finest coffees was brought to the public’s attention by Oxfam, a non-profit, anti-poverty organization after several months of unsuccessful attempts to convince Starbucks to lift its block on Ethiopia’s application to own its coffee names. Starbucks swears its hands are not behind the bump on the trademark process but refused to talk about it despite repeated calls by Ethiopia and Oxfam. It took a good deal of pressure from consumers responding to calls by Oxfam to bring Starbucks to the table, and even when it did so, it came with strings and excuses that lead to nowhere.
The Ethiopian Fine Coffee Trademark Licensing Initiative, a project funded in part by the UK’s Department for International Development, implemented by Ethiopia aims to secure Ethiopia’s legal ownership of its specialty coffee names through trademark registration. Accordingly, in February 2005, Ethiopia filed trademark applications with the United States Patent and Trademark Office (USPTO) to register the names Sidamo, Yirgacheffe, and Harar but Starbucks signaled the National Coffee Association (NCA), of which the company is a leading member and the NCA later blocked the application at the USPTO. Starbucks denies the allegation and at the same time, insists trademark will not help the Ethiopian farmers.
Coffee accounts for more than half of Ethiopia’s export earnings. Close to 15 million people including farmers’ families and tradesmen depend on this crop for their livelihoods. The global coffee crisis, and the over-supply of commodity coffee that followed, over the last decade have severely affected the lives of Ethiopian coffee farmers. As a result, Ethiopian farmers are uprooting their coffee trees replacing them with chat (a narcotic plant banned in the US and most European countries) because the latter fetches the minimal income needed for them to stay alive.
Ethiopia’s fine coffees rank among the very high qualities in the world. This reputation is the source of pride for the farmers as it is the result of the hard work of generations. While these coffees sell at a premium, commanding a considerably higher price at retail markets, it is the roasters and retailers who reap the largest portion of the profit. Light Years IP (LYIP), a non-profit organization dedicated to alleviating poverty through utilization of Intellectual Property solutions, reported that Ethiopia currently captures only 6%-10% of the Specialty coffees’ retail price. LYIP believes, the Fine Coffee Trademark Licensing Initiative enables Ethiopian poor coffee farmers and coffee sector workers to capture a greater share of the retail price that the fine coffees earn in foreign markets. Oxfam estimates, trademarking Ethiopia’s coffee names brings the country an earning of $88 million a year.
According to the World Intellectual Property Organization (WIPO), “A trademark is a sign used by an enterprise to distinguish its goods and services from those of other enterprises. It gives its owner the right to exclude others from using the trademark. A geographical indication tells consumers that a product is produced in a certain place and has certain characteristics that are due to that place of production. It may be used by all producers who make their products in the place designated by a geographical indication and whose products share typical qualities.”
Ethiopia’s Intellectual Property Office’s (EIPO) approach is to register the trademarks for the country’s Specialty coffees only. Specialty coffees are fine or gourmet coffees that solidly stand out from the pack of average Arabica beans on their own merits whereas commodity coffee is the generic run of the mill coffee which is listed as the New York "C" price.
In light of all these, trademarking Ethiopia’s Specialty coffees makes a perfect business sense. To the contrary, in its press release, Starbucks literally said Geographic Indicators (GI also known as Certification), and not trademark, is what is good for Ethiopia. The release reads, “On Oct. 25, Starbucks sent a letter to representatives of the Ethiopian government, offering to enter into an agreement with the Ethiopian government that would support and assist the government in developing and implementing a certification program.”
The 88 million dollar question is who determines what is good for the Ethiopian farmers? Is Starbucks’ assertion, the proposed alternate agreement scheme aside, a genuine one? Starbucks buys less than 5% of its coffees from Ethiopia. Early this year, the company announced that it has planned to increase the quantity of coffee it is buying from Ethiopia by 380%; meaning, the company is planning to buy about 20% of its coffee purchase from Ethiopia. This is a positive initiative that helps the farmers. In some coffee growing regions of the world, Starbucks is even engaged in social services projects and these initiatives have won the company respect by communities. It is implausible however, that such nicety would extend to advising governments on their development strategies. As a Fortune 100 company that recognizes profitability to be essential for its success, it would be fallacious to think that Starbucks would go the extra mile and confront a government in the third world out of good intention of protecting farmers against economic harms.
Several important questions and concerns arise over initiatives, such as this, especially when the government gets involved in the process. Fair Trade activists also justly scrutinize this trademark issue due to the lack of confidence in the government to commit itself to a transparent and fair appropriation of proceeds to the farmers. However, as it stands, all these concerns are secondary. The issue of highest priority is a genuine debate over the pros and cons of trademark vis-à-vis Geographic Indicators.
When pressured, Starbucks hinted its intentions in its press release issued on October 26, 2006: “As part of the proposed Agreement, Starbucks (and all other coffee companies) would be able to use Ethiopian regional name only to describe accurately, as Starbucks does now, the origin of their coffees. Specifically for Starbucks, we would use the regional name only in connection with coffee that meets our quality standards.” In effect, this depicts the wishes to retain the status-quo where, for example, Starbucks labels its coffees purchased from Sidamo as “Sidamo Ethiopia” as it does now – without being expected to pay a royalty fee. For that matter, Yirgacheffe and Harar also occasionally appear, handwritten on a tiny blackboard, at Starbucks stores. This is GI certification.
Starbucks’ proposal does not enumerate the farmers’ added benefit through GI, making it difficult to comparatively analyze its merits over Ethiopia’s strategic plan. The coffee giant is not helping in the debate over systems that will work for Ethiopian farmers’ situation. Rather, it appears that the company’s statements are derailing the debate off its course. The company’s messages pushed out through the series of press releases, ads on national papers, and its phone reps seem to be aimed at deflecting the publics’ attention towards the endless question of whether Starbucks exploited coffee farmers or not. The disparity between the price paid for a cup of Starbucks coffee and the amount paid to the farmers is so evident that it can only be addressed through well thought out strategies than a blame game.
Sometimes you have turn questions upside down to find the right answer. If trademarking Ethiopia’s Specialty coffees translates to a gain of $88 million annually for the poor farmer, why is it not helpful to trademark? Who is the legitimate owner of the names Sidamo, Yirgacheffe, and Harar? How come it was ok for Starbucks to use ‘Sidamo’ when it applied in 2004 (later dropped) for ‘Shirkina Sundried Sidamo’ trademark?
A Starbucks employee answered one of these questions by saying, “The Ethiopians are not smart enough to implement and manage this initiative…the design of the initiative is fundamentally flawed.” The company’s official reply was “Signing a trademark agreement as Oxfam suggests will not help coffee farmers. In fact, it may hurt them if roasters stop purchasing Ethiopian coffees.” A ridiculous remark at best and a fallacy at worst!
Ethiopia’s fine gourmet coffees are not substitutable with other commodity coffees. Owing to their qualities, the best coffees in the world accommodate price elasticity. Besides, it is farfetched to assume the world’s coffee giant, Starbucks, will stop buying these coffees if the retail profit margin drops by a few cents per pound. In the worst case scenario, if the companies decide to punish Ethiopia for trademarking, the farmers, who will have nothing left to lose, will most likely resort to planting chat as they are already getting used to doing it.
Consumers, the backbone of the coffee industry, demand an equitable marketing system that benefits farmers as much as the roasters and retailers. Misuse of the market power has a consequence that would affect the people at both ends of the market chain. Over 60,000 signatories, including this writer, have asked Starbucks to honor its promises to the farmers. All we are asking is that Starbucks sign the Licensing Agreement acknowledging Ethiopia’s ownership of its coffee names. Ethiopia will clearly benefit from trademarking, and how its government handles the positive step gained toward poverty reduction will be one more issue that the Ethiopian people will add on to their to-do list which includes, among others, good governance, human rights, peace and stability, freedom of speech, HIV/AIDS prevention, and poverty reduction.
---
Wondwossen Mezlekia is a Fair Trade activist based in Seattle. He can be reached for comments at wmezlekia@msn.com
By Wondwossen Mezlekia, Seattle
www.ethiomedia.com
Novemeber 13, 2006
--------------------------------------------------------------------------------
Ethiopia, the birthplace of coffee, and Starbucks, the world’s Specialty coffee giant, dominated headlines of the major media outlets in an uncanny coming together. The controversy over Ethiopia’s trademark application for its finest coffees was brought to the public’s attention by Oxfam, a non-profit, anti-poverty organization after several months of unsuccessful attempts to convince Starbucks to lift its block on Ethiopia’s application to own its coffee names. Starbucks swears its hands are not behind the bump on the trademark process but refused to talk about it despite repeated calls by Ethiopia and Oxfam. It took a good deal of pressure from consumers responding to calls by Oxfam to bring Starbucks to the table, and even when it did so, it came with strings and excuses that lead to nowhere.
The Ethiopian Fine Coffee Trademark Licensing Initiative, a project funded in part by the UK’s Department for International Development, implemented by Ethiopia aims to secure Ethiopia’s legal ownership of its specialty coffee names through trademark registration. Accordingly, in February 2005, Ethiopia filed trademark applications with the United States Patent and Trademark Office (USPTO) to register the names Sidamo, Yirgacheffe, and Harar but Starbucks signaled the National Coffee Association (NCA), of which the company is a leading member and the NCA later blocked the application at the USPTO. Starbucks denies the allegation and at the same time, insists trademark will not help the Ethiopian farmers.
Coffee accounts for more than half of Ethiopia’s export earnings. Close to 15 million people including farmers’ families and tradesmen depend on this crop for their livelihoods. The global coffee crisis, and the over-supply of commodity coffee that followed, over the last decade have severely affected the lives of Ethiopian coffee farmers. As a result, Ethiopian farmers are uprooting their coffee trees replacing them with chat (a narcotic plant banned in the US and most European countries) because the latter fetches the minimal income needed for them to stay alive.
Ethiopia’s fine coffees rank among the very high qualities in the world. This reputation is the source of pride for the farmers as it is the result of the hard work of generations. While these coffees sell at a premium, commanding a considerably higher price at retail markets, it is the roasters and retailers who reap the largest portion of the profit. Light Years IP (LYIP), a non-profit organization dedicated to alleviating poverty through utilization of Intellectual Property solutions, reported that Ethiopia currently captures only 6%-10% of the Specialty coffees’ retail price. LYIP believes, the Fine Coffee Trademark Licensing Initiative enables Ethiopian poor coffee farmers and coffee sector workers to capture a greater share of the retail price that the fine coffees earn in foreign markets. Oxfam estimates, trademarking Ethiopia’s coffee names brings the country an earning of $88 million a year.
According to the World Intellectual Property Organization (WIPO), “A trademark is a sign used by an enterprise to distinguish its goods and services from those of other enterprises. It gives its owner the right to exclude others from using the trademark. A geographical indication tells consumers that a product is produced in a certain place and has certain characteristics that are due to that place of production. It may be used by all producers who make their products in the place designated by a geographical indication and whose products share typical qualities.”
Ethiopia’s Intellectual Property Office’s (EIPO) approach is to register the trademarks for the country’s Specialty coffees only. Specialty coffees are fine or gourmet coffees that solidly stand out from the pack of average Arabica beans on their own merits whereas commodity coffee is the generic run of the mill coffee which is listed as the New York "C" price.
In light of all these, trademarking Ethiopia’s Specialty coffees makes a perfect business sense. To the contrary, in its press release, Starbucks literally said Geographic Indicators (GI also known as Certification), and not trademark, is what is good for Ethiopia. The release reads, “On Oct. 25, Starbucks sent a letter to representatives of the Ethiopian government, offering to enter into an agreement with the Ethiopian government that would support and assist the government in developing and implementing a certification program.”
The 88 million dollar question is who determines what is good for the Ethiopian farmers? Is Starbucks’ assertion, the proposed alternate agreement scheme aside, a genuine one? Starbucks buys less than 5% of its coffees from Ethiopia. Early this year, the company announced that it has planned to increase the quantity of coffee it is buying from Ethiopia by 380%; meaning, the company is planning to buy about 20% of its coffee purchase from Ethiopia. This is a positive initiative that helps the farmers. In some coffee growing regions of the world, Starbucks is even engaged in social services projects and these initiatives have won the company respect by communities. It is implausible however, that such nicety would extend to advising governments on their development strategies. As a Fortune 100 company that recognizes profitability to be essential for its success, it would be fallacious to think that Starbucks would go the extra mile and confront a government in the third world out of good intention of protecting farmers against economic harms.
Several important questions and concerns arise over initiatives, such as this, especially when the government gets involved in the process. Fair Trade activists also justly scrutinize this trademark issue due to the lack of confidence in the government to commit itself to a transparent and fair appropriation of proceeds to the farmers. However, as it stands, all these concerns are secondary. The issue of highest priority is a genuine debate over the pros and cons of trademark vis-à-vis Geographic Indicators.
When pressured, Starbucks hinted its intentions in its press release issued on October 26, 2006: “As part of the proposed Agreement, Starbucks (and all other coffee companies) would be able to use Ethiopian regional name only to describe accurately, as Starbucks does now, the origin of their coffees. Specifically for Starbucks, we would use the regional name only in connection with coffee that meets our quality standards.” In effect, this depicts the wishes to retain the status-quo where, for example, Starbucks labels its coffees purchased from Sidamo as “Sidamo Ethiopia” as it does now – without being expected to pay a royalty fee. For that matter, Yirgacheffe and Harar also occasionally appear, handwritten on a tiny blackboard, at Starbucks stores. This is GI certification.
Starbucks’ proposal does not enumerate the farmers’ added benefit through GI, making it difficult to comparatively analyze its merits over Ethiopia’s strategic plan. The coffee giant is not helping in the debate over systems that will work for Ethiopian farmers’ situation. Rather, it appears that the company’s statements are derailing the debate off its course. The company’s messages pushed out through the series of press releases, ads on national papers, and its phone reps seem to be aimed at deflecting the publics’ attention towards the endless question of whether Starbucks exploited coffee farmers or not. The disparity between the price paid for a cup of Starbucks coffee and the amount paid to the farmers is so evident that it can only be addressed through well thought out strategies than a blame game.
Sometimes you have turn questions upside down to find the right answer. If trademarking Ethiopia’s Specialty coffees translates to a gain of $88 million annually for the poor farmer, why is it not helpful to trademark? Who is the legitimate owner of the names Sidamo, Yirgacheffe, and Harar? How come it was ok for Starbucks to use ‘Sidamo’ when it applied in 2004 (later dropped) for ‘Shirkina Sundried Sidamo’ trademark?
A Starbucks employee answered one of these questions by saying, “The Ethiopians are not smart enough to implement and manage this initiative…the design of the initiative is fundamentally flawed.” The company’s official reply was “Signing a trademark agreement as Oxfam suggests will not help coffee farmers. In fact, it may hurt them if roasters stop purchasing Ethiopian coffees.” A ridiculous remark at best and a fallacy at worst!
Ethiopia’s fine gourmet coffees are not substitutable with other commodity coffees. Owing to their qualities, the best coffees in the world accommodate price elasticity. Besides, it is farfetched to assume the world’s coffee giant, Starbucks, will stop buying these coffees if the retail profit margin drops by a few cents per pound. In the worst case scenario, if the companies decide to punish Ethiopia for trademarking, the farmers, who will have nothing left to lose, will most likely resort to planting chat as they are already getting used to doing it.
Consumers, the backbone of the coffee industry, demand an equitable marketing system that benefits farmers as much as the roasters and retailers. Misuse of the market power has a consequence that would affect the people at both ends of the market chain. Over 60,000 signatories, including this writer, have asked Starbucks to honor its promises to the farmers. All we are asking is that Starbucks sign the Licensing Agreement acknowledging Ethiopia’s ownership of its coffee names. Ethiopia will clearly benefit from trademarking, and how its government handles the positive step gained toward poverty reduction will be one more issue that the Ethiopian people will add on to their to-do list which includes, among others, good governance, human rights, peace and stability, freedom of speech, HIV/AIDS prevention, and poverty reduction.
---
Wondwossen Mezlekia is a Fair Trade activist based in Seattle. He can be reached for comments at wmezlekia@msn.com
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