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Starbucks v. Ethiopia: Trademark War March 6, 2007

Posted by publicpolitics in Uncategorized.
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Ethiopia, fresh from its Christmas invasion of Somalia to dislodge the Islamic Courts Union, has found a new kind of war to fight with a much more powerful enemy. The dispute is over a trademark and the enemy has outposts on every corner in nearly every major city in the world.

At issue? Who owns a name. Ethiopia wants to trademark the names of three of its most famous coffee growing regions, and Starbucks doesn’t like that:

The world’s largest coffee chain is locked in a trademark dispute with Ethiopia, one of the world’s poorest countries. The battle was spurred by a rare aggressive attempt by a developing country to assert intellectual-property rights.

Ethiopia, which Starbucks trumpets as the birthplace of coffee, is seeking to trademark the names of its most famous coffee regions — Sidamo, Harar and Yirgacheffe — which appear on the packaging of Starbucks and other coffee roasters.

Source: online.wsj.com

Starbucks buys only about 2% of its coffee from Ethiopia, and has spent months militating against Ethiopian efforts to trademark the names.

According to the Ethiopian government , growers in the Sidamo region receive only about 75 cents for a pound of a type of coffee that Starbuck’s has sold for as much as $26.00 per pound.

The issue, according to the director general of Ethiopia’s intellectual property office is simply about “reasonable rate(s) of return.”

Tags: Trademark | POOREST | names | locked | largest | Dispute | coffee | CHAIN | Starbucks | Rights | Politics | harar | ethiopia

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Comments»

1. Large Hamster - March 13, 2007

Ethiopia is pursuing a novel proposal created by OxFam in which the government of Ethiopia would trademark geographic names. These being the Sidamo, Harar, and Yirgacheffe coffee growing regions. After doing so, the government of Ethiopia would set up a global network of licensed distributors. The licensed distributors working with the government would then help determine the retail price of Ethiopian coffee and direct some portion of their proceeds to advertise and market the superiority of Ethiopian coffee versus say Colombian coffee. The goal of all of this being higher prices for coffee and happier, healthier coffee farmers.

I believe the novel, untested OxFam approach is unworkable and that it will have the unintended consequence of harming the Ethiopian coffee industry, reducing demand for Ethiopian coffee, and thus hurt already poor coffee farmers and their families. The road to hell is paved with good intentions.

Geographic names are not trademarked. In fact it is not typically even possible to do so. We squeeze Florida oranges not Florida™ oranges and drink Burgundy not Burgundy™. As I noted in earlier posts and alluded to with my sign at the demonstration, Mayor Bloomberg should move quickly to trademark “Brooklyn” to prevent Domino’s from further disparaging its fine history with their horrid new pizza. But, he won’t because the idea is absurd. Alas, the whole world is free to make New York cheesecake.

The government of Ethiopia has not succeeded at providing running water in more than 50% of its villages nor at paving many roads nor at much of anything actually. The country is a basket case, a disaster. It is laughable to suggest that this government is now ready to take on the task of setting up and managing a worldwide network of anything. In any event, it has more pressing issues that it should be focused on.

The government of Ethiopia is good at buying weapons including tanks and fighter jets.

http://en.wikipedia.org/wiki/Military_of_Ethiopia

It is also good at jailing, torturing and killing its opponents. It is corrupt and perhaps very, very corrupt.

http://www.amnestyusa.org/countries/ethiopia/document.do?id=ENGUSA20061116001

http://news.independent.co.uk/world/africa/article2251351.ece

http://en.wikipedia.org/wiki/Ethiopian_police_massacre

In this case the demons are real. This corrupt government will now be managing coffee export and distribution. It is not hard to imagine that some of these coffee earnings could then be converted into more tanks, bullets, and bombs. Given the long history of corruption and theft in Ethiopia and most of Africa (see Nigeria), it is much harder to imagine any of the additional coffee earnings actually making their way to poor farmers. It would be extremely naïve to believe this.

“OxFam” has this all figured out? Well, call me a pessimist but I don’t see a bunch of well armed military guys taking orders from some grad students at OxFam, 5,000 miles away. Does OxFam have a Mig or tanks?

The Oxfam scheme also injects another layer of cost and overhead into Ethiopia’s coffee sales. Costs that will need to be recouped before farmers even have the potential to benefit.

From a coffee buyer’s perspective, the plan makes Ethiopian coffee more difficult to purchase and sell than other coffees. Buyers are asked to sign a lengthy, onerous trademark licensing agreement. This makes buying other coffee easier and more attractive. This places Ethiopia at a disadvantage in the marketplace which is likely to lead to lower demand and lower prices. Not a good outcome for farmers.

Instead of the complex, unworkable and potentially lethal Oxfam scheme, I think Ethiopia should follow the tested and traditional approach of geographic certification. Florida oranges, Burgundy wines, Napa Valley wines, and Colombian coffee all have producers’ co-operatives that insure these products actually are grown and produced in their stated geographies. The co-operatives then pool some of their resources to promote their products to try and increase demand and thus prices. Juan Valdez, the Colombian coffee dude, and his burro are the creation of one of these co-operatives. Oxfam is essentially saying that all of these large, well established, proven co-operatives are wrong. I say their sales and the demand for these products prove they are right. The livelihood of Ethiopian farmers will hang on the outcome of this bet.

Creating new customers for Ethiopian coffee rather than attacking existing customers is likely to generate incremental demand and higher prices. Neither McDonald’s, Proctor and Gamble, Dunkin Donuts nor Kraft purchase any coffee from Ethiopia. They could. However, if you are the CEO of McDonald’s and you see the no win situation that Starbucks now has with Ethiopia are you really going to want to leap into the fray? This dispute is repelling demand. That is not good for farmers.

But hey Bush and Cheney are lovin’ it. OxFam has concocted a scheme that will in effect funnel money to their ally in the horn of Africa with the funds coming from well intentioned liberal do-gooders while simultaneously attacking one of the most liberal companies in America and harming a major contributor to the Democrats.

2. Sammy - October 16, 2007

This must have been written by a Starbucks employee…


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