[image from abc. For those new to the Ethiopia coffee trademark issue, start here]
I s’pose there’s no definitive way to tell what combo of reasons made Starbucks move from opposing Ethiopia’s effort to trademark its coffees to treading an allegedly neutral (but nowhere near pro-trademark) position. But I’m wondering if the threat of stockholder anger pushed the mermaid to change its stance.
According to a Wall Street Journal article (requires subscription) titled “BREWING CONFLICT: Ethiopia Battles Starbucks Over Rights to Coffee Names,” at least one ethically oriented financial company made a call to Starbucks about the issue.
Apparantly, Adam Kanzer, managing director at Domini Social Investments, which manages $1.8 billion, including shares of Starbucks, called Starbucks to “voice his concern that Starbucks’s stand is inconsistent with the company’s socially responsible heritage.” Adam’s quoted saying that Starbucks’ “immediate focus is on their profit margins,” while Starbucks’ response to the Ethiopian tradmark issue is “part of the real value of the company from an investment perspective.”
WSJ writes that “Starbucks executives, however, say that if Ethiopia wants to increase the value of its regional coffee names, the best way is to allow Starbucks to freely promote them in its nearly 13,000 stores around the world.” The problem with that argument? That strategy, so far, has led to Starbucks making $26 an lb on these coffees while Ethiopian farmers make a mere 75 cents a pound.
Of course, Starbucks won’t apologize for this inequity. WST quotes Dub Hay, a VP at Starbucks, saying: “We’re not really apologizing for the [profit] margins because what we do with that margin is open new stores…. The gift that Starbucks can bring to the coffee farmer is the guarantee of more business next year.”
Wait — Doesn’t some of that margin go toward paying the salaries and bonuses of people like Dub? And regardless, will Starbucks be opening even more stores next year? Yeah — thought so. What happens to the margins for Ethiopian farmers then?
Still, don’t underestimate Starbucks’ ability to skirt around the issue. Starbucks’ application to trademark the name “Shirkina Sun-Dried Sidamo” was a big part of the reason why the U.S. Patent and Trademark Office blocked Ethiopia’s application for “Sidamo” in 2005. Now, writes the WSJ, “Starbucks has yanked the name “Sidamo” off the coffee,” renaming it “Ethiopia Sun-Dried Shirkina.” Nice PR move.
Other than the screaming radicals who believe that all large corporations are run by demons bent on devouring the human race, it should be clear that all of the parties in the Ethiopia trademark battle would like to find a way to help and support Ethiopian coffee farmers. It is, after all, in Starbucks best interest to do so. And indeed, they are already working with and supporting the farmers with various projects as detailed in the WSJ story.
Ethiopian coffee farmers have embraced a novel proposal created by OxFam in which the government of Ethiopia would trademark geographic names–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 usually trademarked. In fact it is not typically even possible to do so. We squeeze Florida oranges not Florida™ oranges and drink Burgundy not Burgundy™. I wish Mayor Bloomberg could 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. It is also good at jailing, torturing and killing its opponents. It is corrupt and perhaps very, very corrupt. In this case, the demons are real. This corrupt government will now take on the added task of managing coffee exports 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 thinks that it has created some checks and measures that will prevent this outcome. Well, call me a pessimist but I don’t see a bunch of well armed military guys taking orders from some intern grad students at OxFam 5,000 miles away. Does OxFam even have a tank?
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 coffees easier and more attractive and thus places Ethiopia at a disadvantage in the marketplace. This 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 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, is the CEO of McDonald’s, seeing the no-win situation that Starbucks now has with Ethiopia, likely to decide to leap into the fray? This dispute is repelling demand. That is not good for farmers.
Ethiopia needs to abandon the unworkable OxFam scheme, embrace not attack its customers, and work to find more customers. I cannot see any upside to coffee farmers from increased government involvement in the Ethiopian coffee market.
Comment by Large Hamster — March 8, 2007 @ 5:38 am
-whose place is it to say what constitutes “help and support [for] Ethiopian coffee farmers”? Starbucks? The Ethiopian Government? Western NGO’s like Oxfam?
-Oxfam didn’t inititate this project, it started as a joint project between light years IP and the Ethopian Governemtn. Oxfam has only gotten involved on the campaigning front.
-Are you aware of any other examples of successful usages of IP law to help poor people take ownership of their intangible intellectual property?
-Have you read through the license agreements or enforcement mechanisms you are talking about that you claim will result in greater arms purchases for a corrupt Ethiopian Government or are you completely speaking off the cuff?
-Finally, and this is a question: I am not sure that anyone who buys Ethiopian coffee has to sign a license agreement, but only those who seek to profit from the recognized names of the Ethiopian coffee regions. I.e. Nestle is currently buying Ethiopian coffee for their fair trade certified Partners’ Blend in the UK but because they don’t use the the terms Sidamo, Harrar, Yirgacheffe, etc they don’t have to sign any license agreement.
Large Hamster, maybe you have read through all the relevant documents but your comment seems to be little more than uninformed conjecture.
Comment by jbaalltheway — March 9, 2007 @ 5:37 am
Actaully lots of region names are protectec
Large Hampster: Champage really is from Champagne - else it’s sparking wine. Stilton cheese, Parma ham, both HAVE to come form a certain region. This protecting regional names is not a novel approach.
Also Starbucks is bound by law to put the interest of their stockholders above those of Ethiopian farmers or Ethiopia in general (hence stockholder call make a difference). There will be at times competition for margin - let the farmers use what honest leverage they have to improve their margins. think that Starbucks is striving to act in their interests is in my opinion as unlikely as all corporations being run by demons
Comment by Alistair — March 9, 2007 @ 8:39 am
Champagne and Stilton are geographic certifications not trademarks. Ethiopia should do the same.
Comment by Large Hamster — March 13, 2007 @ 11:22 am
Alltheway:
Thank you for the LightyearsIP information. Their website is very informative. It doesn’t change my mind. I still believe that the most likely outcome of their plan is lower demand for Ethiopian coffee and thus more, not less, poor farmers.
The government of Ethiopia is well armed and it kills people that disagree with it. This is not a subject of debate.
Ethiopia is Bush’s top ally in the Horn of Africa. This is also simple fact.
Comment by Large Hamster — March 13, 2007 @ 12:00 pm
I’m sick of Large Hamster’s flaming—using the same post/tired arguement on everyone’s blog. (So smart, the hamster knows how to use “copy and paste”!) Okay, so it makes sense to everyone but Large Hamster that the trademark of coffee names will bring money to the farmers. Large Hamster obviously either works for a big “Corp” under the disguise of being anti-Bush, or some other EEUU faction.
Comment by Sick of the hamster — March 23, 2007 @ 7:11 am
You’ll notice the give and take in the comments that precede your flame.
If you disagree with me, then make your case.
Comment by Large Hamster — April 4, 2007 @ 1:21 pm
The fine government of Ethiopia made the front page of the NY Times today (6/18/08) for its tremendous success in raping and killing villagers. Did I plant that story? Is the NY Times Fox?
http://www.nytimes.com/2007/06/18/world/africa/18ethiopia.html?hp
“In village after village, people said they had been brutalized by government troops. They described a widespread and longstanding reign of terror, with Ethiopian soldiers gang-raping women, burning down huts and killing civilians at will.
It is the same military that the American government helps train and equip — and provides with prized intelligence. The two nations have been allies for years, but recently they have grown especially close, teaming up last winter to oust an Islamic movement that controlled much of Somalia and rid the region of a potential terrorist threat.
The Bush administration, particularly the military, considers Ethiopia its best bet in the volatile Horn — which, with Sudan, Somalia and Eritrea, is fast becoming intensely violent, virulently anti-American and an incubator for terrorism.”
Go ahead buy more Ethiopian coffee.
Comment by Large Hamster — June 18, 2007 @ 8:40 am