After this article was published on Addis Fortune, an Ethiopian weekly paper, I received an angry response from Light Years IP, the NGO advising Ethiopia on the coffee trademark project, warning me that I would damage my reputation if I continued to publish my "mistaken" opinions. The email did not identify my mistakes. More coming soon.
--------------
Why did Ethiopia sign an agreement critics say is favoring Starbucks? Wondwossen Mezlekia, an Ethiopian working and living in Seattle, Washington - where Starbucks is also headquartered - has been following the trademark dispute through his well-read blog, www.poorfarmer.blogspot.com. In his contribution to a series of articles that appeared on this newspaper, Wondwossen sheds some light on the issue.
Ethiopia's Loss in the Starbucks Affair
Addis Fortune
Ethiopia, one of the ancient civilisations in the world, collided with a symbol of globalisation and, to some extent, challenged the status-quo without success. The outcome should serve third-world countries as a reminder of the harsh reality that they have a long way to go to get control of their intellectual property rights.
Although Ethiopian coffees command a premium price in foreign markets, particularly the United States (US), farmers who grow the beans often live in extreme poverty. The Ethiopian coffee sector's strategy to trademark the famous coffee brands in all major international markets was an eye-opener for many of the coffee growing nations in Africa. But that effort hit a dead end in the US, home of Starbucks Corporation and this led to several months of conflict between the two.
On June 20, 2007, Starbucks and Ethiopia declared that they have both emerged as winners. But analyses of documented facts suggest that there is more to the affair than what either side claims. The bizarre and mysterious ending of the dispute warrants further scrutiny of the accord.
Whether and how the terms of the truce will benefit the Ethiopian coffee sector and the trademark project remains to be seen. What is unquestionable is that, because of Starbucks and the National Coffee Association (NCA), Ethiopia has lost the trademark for Sidamo in the US. Sadly, Ethiopia has also surrendered the moral high ground that had won it support all over the globe; it has very little to show for it. Besides, all the windfall economic opportunities that might have changed the lives of the poor farmers, who, for centuries, have been taken advantage of, have vanished into thin air.
The conflict began in March 2005, when Ethiopia filed with the US Patent and Trademark Office (USPTO) to trademark the country's most valued brands Harar, Sidamo, and Yirgacheffe. Starbucks had filed an application to trademark "Shirkina Sun-Dried Sidamo" in 2004, making it impossible for Ethiopia to go forward with its own application until the two applicants reached an agreement to drop one. The Ethiopian government asked Starbucks to drop its claim.
Kassahun Ayele, the former Ethiopian Ambassador to the US, now serving in the same position in Berlin, made the initial effort to engage Starbucks in discussions to resolve the matter. But his letter to Howard Schultz, chairman of Starbucks, went unanswered for over a month. When it did get answered, Starbucks' response was condescending.
He received on April 21, 2005, a short and dismissive reply from a company lawyer, and a short time later, a note from a Corporate Vice President inviting him to attend the award event for Mr. Schultz, and to contribute 600 dollars for the 'privilege.', according to the Embassy.
In October 2006, Oxfam launched an international campaign to force Starbucks to come to the table and discuss with Ethiopia for resolution. The campaign was framed to depict Starbucks as a company exploiting its coffee producers. The theme, "For every cup of Ethiopian coffee Starbucks sells, Ethiopian farmers earn 3¢", proved to be Starbucks' irritant.
Arrogance combined with a desire to counteract Oxfam's unexpected campaign actions might have blinded Starbucks' management into making several ridiculous assertions.
First, the company claimed that Ethiopia's coffee brands cannot be trademarked because they are generic terms for coffee, rather than distinctive marks. They then asserted that the trademarks are against the interests of Ethiopian farmers. At the peak of its charges, the company went on to say that Ethiopia's attempt to trademark the coffee brands was illegal. They exhausted all their fabricated allegations before running out of charges to publicly discredit Ethiopia's trademark project.
Ultimately, forced by mounting public pressure, Starbucks senior management resorted to a different strategy without losing sight of their goals. They hired the Washington-based lobbying firm, The Whitaker Group, and travelled to Ethiopia to convince government authorities by employing alternative negotiating tricks.
On the lead-up to the company executives' second trip to Ethiopia in February 2007 - first trip was in November 2006 - Starbucks announced its donation of half a million dollars to CARE International, a US-based charity organisation, for its social work in the coffee growing regions of Ethiopia. In addition, the company issued a press release with promises to build a farmer support centre and to double the volume of coffee the company buys from East Africa.
During their meetings held in Addis Abeba, Starbucks succeeded in convincing Ethiopian authorities to divert their attention to what they called a "value-added" process. Empty promises, such as the possibility of cooperation with the country's tea and textile sector, and implied support through the African Growth and Opportunity Act (AGOA), were used to entice state ministers from ministries of Agriculture and Rural Development, Trade and Industry, Finance and Economic Development, and others, including Getachew Mengistie, director general of the Ethiopian Intellectual Property Office (EIPO).
None of those sectors are as vital as the most exploited coffee sector, which continues to be the backbone of the Ethiopian economy. In spite of that, the authorities were swayed and subsequently signed on Starbucks' press release announcing their agreement to "work together". Four months after that agreement and deafening secret negotiations, the government representatives and Starbucks declared their signing of a "marketing, licensing, and distribution" agreement on June 20, 2007.
The devil, however, is in the details.
As a global company that fights to secure its grip over the sources of its coffee, it is evident that Starbucks' opposition to Ethiopia's trademark initiative stems from three basic elements: Royalty fees, monopoly over the brands and traceability.
As long as Starbucks will not be expected to pay royalty fees, and so long as Ethiopia does not legally own the Sidamo brand, which is the most important brand to Starbucks - Starbucks does not hold Harar and Yirgacheffe coffees in many of its stores - signing some sort of weak licensing agreement, with secret details that do not mention financial resources to help promote Ethiopian coffee, offers a safe exit. Therefore, a negotiated settlement outside of administrative rights to own the trademarks is a viable option for Starbucks.
Starbucks' concern about Ethiopia monopolising the brands is already non-existent, at least in the US, as Sidamo is not a registered mark. Also, because Starbucks buys most of its coffees through third parties, the concern about tracing the beans to the origin is automatically taken care of.
Starbucks' obligations in the agreement, if any, are confidential. The signatories imply that Ethiopia's obligations are uncomplicated and the benefits flowery.
Getachew Mengistie said Ethiopia's obligation is not to impose a royalty fee of any nature during the contract period whereas its benefits include a contractual provision, which recognises Ethiopia's common law rights where applicable.
According to available information, however, Ethiopia's benefits are not as impressive as the words. Although common law is a valid form of trademark rights in the US as rights stem from use rather than registration in this country, not all countries have the same system as the US. In some countries, Ethiopia does not have any rights at all unless the mark is registered.
In addition, enforcement of trademarks is expensive and probably not practical in every instance of infringement. That is why the conventional rights of registration are important - they help prevent infringement and consequently avoid expensive enforcement before it occurs.
Strikingly, the negotiation process did not fully address the promises made by Starbucks during the February 2007 meeting, which Getachew proudly refers to as the turning point that led to the resolution. Only the promotion of the output of other sectors is mentioned in the contract. Even that is not listed as enforceable.
The government representatives failed to follow through on the rest of the promises, such as building a farmers support centre and doubling the amount of coffee Starbucks would buy from Ethiopia, which is believed to be only two per cent. The centre was not even a negotiating point, if we go by what Samuel Assefa (PhD), Ethiopia's ambassador to the US, said.
"Starbucks is a private company; we cannot ask them to open a farmer support centre in Ethiopia," he told the media.
But another African country leader did just that: reached out to private companies such as Starbucks, Google and Costco to attract business investment. His name is Paul Kagame, the president of Rwanda.
Starbucks invited Mr. Kagame to deliver a corporate endorsement at the company's annual shareholder meeting on March 21, 2007, - a key moment when Starbucks executives needed an African leader to paint a picture different from what the shareholders have come to read in the media as a result of the trademark dispute.
Recent reports indicate that Starbucks eyes Rwanda for setting up the Farmer Support Centre.
Another widely publicised promise was that Starbucks would increase its Ethiopian coffee purchases. As of this day, there is no indication that Starbucks bought more Ethiopian coffee; nor is there any way to substantiate this claim in the future as Starbucks buys most of its coffee through third parties, mainly from Germany.
How else Ethiopia benefits from the agreement is either not defined, or undisclosed.
"Having the commitment and support of Starbucks will help enhance the quality of Ethiopian fine coffees and improve the income of farmers and traders," Getachew, told the media.
But Starbucks' executives do not acknowledge any such commitment.
In an interview with the Seattle PI, Sandra Taylor, Starbucks senior vice president of Corporate Social Responsibility, said that the deal was not intended to set prices.
"Starbucks pays based on the quality and marketplace," she said. "If this works right, it will lead to better pricing for high quality . . . For Starbucks, we have long paid premium prices."
Starbucks would work with Ethiopian farmers to improve quality and crop yield, but not dedicating any new financial resources, according to the paper's report. The status-quo is conserved.
What did Ethiopia lose? Everything it tried to gain, and then some.
Starbucks succeeded in preventing Ethiopia from gaining permanent control of the mark Sidamo in the US market, effectively eliminating Ethiopia's opportunity to move beyond its cycle of poverty.
In addition, the long fought battle to this ruinous end was exasperated by Ethiopia's loss of dignity in the process. Oxfam's approach of using images of poor farmers, the victims of Starbucks' insensitivity, was meant to coerce the company into changing the way they do business; but instead, Ethiopia once again garnered a reputation reminiscent of 1984. The country was dishonoured in front of the world while its Ambassador was disrespected. The trademark initiative was discredited and the project was delayed by over two years. As if that was not enough, Ethiopia was deceived by empty promises.
Starbucks has still not admitted any of its wrong doings: its misleading statements, which unlawfully undermined the people's rights, and its disrespect to a sovereign country's Ambassador, much less apologise for trying to publicly discredit the country's efforts. To this day, the company has not expressed regret for its opposition that cost Ethiopia the opportunity to trademark Sidamo.
The trademark dispute which carried the hopes of over 15 million people was concluded with a reprehensible remark by Ambassador Samuel: "Ethiopia salutes Starbucks for its exemplary display of global corporate citizenship. This alliance highlights the significance of visionary entrepreneurs in creating space for win-win engagements between corporations that operate globally and developing countries such as ours."
And Oxfam celebrated "resolution" of the dispute between Starbucks and Ethiopia.
Starbucks recently increased its coffee prices in the US by nine cents a cup, which further widens the income gap between Starbucks and coffee farmers. But, the equation still remains the same: "For every cup of Ethiopian coffee Starbucks sells, Ethiopian farmers earn three cents."
Well, Light years IP has it wrong. Contrary to damaging your reputation, you are earning your readers’ respect and admiration for not letting this issue slide into oblivion after Starbucks and the Ethiopian government representatives signed a "marketing, licensing, and distribution" agreement on June 20, 2007.
ReplyDeleteThe anguished and impoverished coffee farmer is indebted to you for chipping away at the pervasive climate of secrecy by questioning the contents of the agreement, for thwarting the unrelenting need to confuse the public by clarifying the difference between such things as common law and trademark rights, for offering your analyses of what the facts suggest, and most of all for keeping your readers focused on the primary cause of the dispute between the two opposing parties.
I have been reading your blog with a passion born of hope, and so far have not been disappointed. So many of us have first hand knowledge of the coffee farmers’ heartbreakingly miserable lives, yet feel helpless to change their predicament. God bless you for daring enough to reveal and confront what others find easier to ignore.
Menkeli
Dear Wondwossen,
ReplyDeleteHeard about this blog from a friend - really glad I checked it out. I second Menkeli’s comments – God bless you. Thank you for carving out the time to inform yourself - and by extension us. You are a remarkable humanitarian.
Selamu
I wonder if the doom and gloom in this post might have it wrong. There seem to be two possible reasons for secrecy in the agreement. One would be that Ethiopia, as you said, has granted more concessions to Starbucks than was intended and as such Ethiopia wants to keep things secret. The other would be, however, that perhaps Starbucks gave up more than they wanted to in the negotiations, and don't want to admit it in public. If they did, then every other coffee producer they buy from might start expecting better treatment that Starbucks doesn't particularly want to give them. I may be right, I may be wrong, but it seems that confidentiality over an agreement (something quite common in the business world) does not need to imply that Ethiopia came out the worse for the struggle. To the contrary, Ethiopia would logically have everything to gain in US public opinion by sharing the details of the agreement (if they "lost") so as to pressure Starbucks further to make more concessions. Since public opinion is, after all, the reason Starbucks was forced to the negotiating table in the first place.
ReplyDeleteHi Anonymous,
ReplyDeleteActually, this post is about those things that are not secret (the secrecy issue is discussed in other posts); it is about a collection of what has been admitted by the parties and documented by the media – more of doom that is. The loss of Sidamo; the irrelevance of common law rights in other countries and its impracticality for Ethiopia to enforce it even in the US; the absence of compensations due to the damages inflicted upon Ethiopia; the deceit; the status-quo; the stick-stick incentive; etc. are some of the recorded, not-too-secret news that are narrated.
Let’s discuss your second assumption first. Realistically, what Starbucks owes Ethiopia or, if you will, the reasons why Starbucks should compensate Ethiopia for are different from what is experienced by other coffee growers. By the way, farmers, no matter how poor they are, never ask for something that is not rightfully theirs’; African farmers never asked Starbucks to pay an equivalent of the price it pays in Central and South Americas; farmers don’t expect to be paid the right price for their coffees let alone expecting a different treatment.
Having said that, what Ethiopia lost, as discussed in this post, are on top of the exploitation of its farmers by the multinationals. They are different from, say, the prevalence of an imbalance of power, deep-rooted exploitation, and the unfair global trade practices, which are all featured in the documentary film Black Gold. These are not considered as a loss here because these problems are not unique to Ethiopia’s farmers. Most of the other coffee producing nations do share all of the same problems.
Other farmers might expect the same treatment if your assumption, “perhaps Starbucks gave up more than they wanted to in the negotiations,” represented, for example, a promise by Starbucks to adopt an all new trade practices, such as paying for its coffees a price equal to what the coffees are worth instead of the NY “C” price plus a few additional pennies for the highest quality or directly negotiating with the farmers instead of buying its coffees from third parties in Germany. Such promises would, in fact, have solved most of the problems highlighted in Black Gold; hence, all of the other coffee growing countries where Starbucks gets its coffees from might expect the same treatment. We know that is not the case because Starbucks executives have already confirmed that to the media. We know this is a dream. But, let’s say a dream has come true and suppose Starbucks has agreed to do just that for Ethiopia and wanted to hide that agreement from others. How long will such an agreement be kept in secret for? How many years would it take for the other coffee growing countries to discover that Starbucks is “favoring” Ethiopia? Do you think Starbucks agrees to pay a higher price per pound of coffee for Ethiopia’s Gemadro farmers than what it pays for Kenya’s Nyeri farmers and yet it expects the Kenyan’s to remain unaware of it?
See? The assumption that Starbucks might be hiding its ‘giveaways’ to Ethiopia is fatally defective.
As to the gloom – your first assumption, I offer a third possible reason: how about “Ethiopia granted more concessions to Starbucks” and Starbucks wants to keep things secret? Don’t you think that is more of the case here?
Historically, coffee trade has its roots in slavery and whether today’s traders are cognizant or not, the trade continues to be the same: slavery. A modern-day version of slavery! By agreeing to cover-up the wounds, Ethiopia’s government representatives have taken a terrible and immoral position of determining the fate of millions of poor farmers in Ethiopia and all over the globe because, their deed has, at least temporarily, obscured the problem; aborted the great effort by thousands of fair trade activists and consumer groups; undermined the good work by socially responsible companies in the industry; and much more. That is where Ethiopia’s representatives dropped the ball.
As a result, I’m afraid both parties are most likely to live with the consequences of their choice to keep their deals – whatever those deals might be – secret.
Thanks for your thought. I just wish you were right.
Menkeli and Selamu - that was really kind of you. Thank you both for your support. Please stay around.
Dear Wondwossen,
ReplyDelete"Light years IP, an NGO, advising Ethiopia" threatening you to ruin your reputation? Amazing. Perhaps, you may want to give us some background details, if you will, on what this organization is as an NGO all about. A deeper look at its mission statement and actual funcions may reveal something interesting. We know one which has successfully spearheaded the initial campaign has shamelessly abandoned the whole struggle for an undisclosed reasons.
It is indeed amazing to see how your continuous research and persistent investigation regarding such a straight forward and simple questions exposed the enemies of our people.
Again, as a reminder 90 thousand and more people protesters on behalf of the poor Eth coffee farmers demanded a few cents of price hike for their speciality coffee and requeste STARBUCKS's support for the trademark issue.
The Eth govt declared they have reached an agreement. Does this agreement recognize the farmers demand and responded positevely? What is the content of the agreement? That is all. Are these questions really difficult to answer?
Anything short of giving answers to the above questions is tantamount to a cover up or a sell out on the interests of the interests of the farmers. Even worth is the kinds threats thrown at the editor of this blogger. Now the list for the 'lobbysts' or ' Hired guns' has gone up. History will one day help us render the verdict on those who live on the sweat and blood of poor the farmers.
Good job Wondwossen. It may take some time but the truth will be out one day.