Ethiopia’s coffee trademarks and the corporate quandary

Lessons learned and challenges of the future

Intellectual Property (IP) assets such as technological know-how, patents, trademarks, brand names and copyrights increasingly make up the majority of the profits from international trade. Developed countries protect and strategically exploit their IP assets but utilization of IP as a tool of economic development is a new experience for developing countries, especially in Africa. The patent laws in these countries, if any, have been limited to fulfilling the purposes of registering trademarks and issuing licenses.

Despite the rich culture and immense potential of natural wealth the country is blessed with, Ethiopia too had lagged behind in identifying and making use of its IP assets. Paradoxically, Ethiopia is one of the poorest countries in the world.

In this context, the recent ambitious plan by Ethiopia to identify and protect the country’s untapped patent assets is dramatic. The initiative to protect the patent rights associated with coffee, one of the most valuable commodities the country grows, is applauded by development experts and agencies as innovative and pioneering though some companies high in the market chain unfortunately opposed to it.

Ethiopia, with a help from Light Years IP (LYIP) laid out a strategy that would enable the country to control the coffee names Harar, Sidamo, and Yirgacheffe through the distinct qualities the coffees have become known for.

The importance of coffee to the economy of Ethiopia is significant. Ethiopia depends on the crop for over 50 percent of the country’s total export earnings and an estimated 15 million people make their living from coffee trade. The country’s specialty coffees are among the world’s best and command high retail prices. Though some of Ethiopian coffees sell for up to $26 per pound because of their quality, taste, and reputation, the farmers often earn as little as 5 to 10 percent of the retail value of their coffee. By protecting the patent rights for these fine coffees, Ethiopia aims at capturing a fair share of the “intangible” values they command in the market.

Ethiopia’s sweeping plan is to register the names in more than 30 countries including the U.S. So far, the country has been granted trademarks for all three names in Canada and the European Union, which consists of 25 member countries. In Japan, Yirgacheffe and Sidamo have been successfully registered while the application for Harar is pending due to prior registration of the name under a Japanese company. In the U.S., however, Ethiopia’s efforts faced a bump due to resistance by Starbucks and the National Coffee Association (NCA).

Though several versions of arguments have surfaced since, the NCA, whom Starbucks is the influential member, opposed the trademark initiative based on the argument that the names Harar, Sidamo, and Yirgacheffe are so ubiquitous that they have become generic, like Java, Kleenex, or Xerox. That is, one can order a 'cup of Harar' like in ‘a cup of Java’ and still be understood that they meant a ‘cup of coffee.’ Therefore, Starbucks and the NCA suggest, the names should instead be registered as Geographic Indications (certification or appellation). Ethiopia rejects this suggestion and stood by its decision to register the names as a trademark. Further, Ethiopia’s representatives wrote to the NCA saying that it is for Ethiopia, not Starbucks or NCA, to decide on which form of patent right protection to pursue.

Roughly, ‘trademark’ provides the owner with control of the name whereas ‘geographic region indication’ renders protections against fraudulent claims by products originating from regions other than the rightful owner of the certification.

Certification of regional names requires the holder to ensure that coffees leaving the country originate only from the region they claim to have. Ethiopia argues, in a country where infrastructures are underdeveloped and information is scarce, certification is neither practical nor feasible. In Ethiopia, coffee is grown in the backyards by millions of households and the crop is transported under treacherous conditions by people. These backward marketing systems and infrastructures make it unimaginable to control whether a given bag of coffee has originated from a certain region. Even if it is possible to attempt to control the supplying routes, it entails a significant financial burden which, given the infinitesimal value a pound of coffee fetches at FOB, is not affordable by Ethiopia.

As is true with any trademark, ownership of the coffee names too comes with added responsibilities of policing (enforcing) the trademarks both internally at export and externally in the distribution channels. Failure to police trademarks may result in losing the rights and privileges associated to trademarks. Taking enforcement action against infringement of the trademarks and associated rights of the country is not an easy responsibility but it may not be more difficult and expensive than enforcing certification marks. Ethiopia envisages at building a network of roasters and importers to work together on promoting the country’s fine coffees by their names as well as in controlling the trademarks. Ethiopia’s plan is a graduating plan where the country hopes to enforce the trademarks as early as a critical stage is reached. An effective task of policing will be made possible through educating farmers on the value of the brands and the importance of maintaining coffee qualities and enforcing the integrity of the trademarks. At the initial stage, Ethiopia will not be ready to enforce the trademarks internally because there is no incentive in place for the farmers to be compelled to maintain the integrity of the coffee brands.

While the debate over trademark vs. certification continues in the coffee industry, Yirgacheffe received final registration as a trademark (that is word mark, not as a regional name) from the USPTO effective August 8, 2006. The application for Harar is still pending awaiting action by Ethiopia to provide evidence that the country is exporting the coffee as Harar. Whereas, USPTO rejected the application for Sidamo because the judge was convinced and consequently concluded that the name is generic. The party in opposition of the trademark application succeeded, at least in the Sidamo case, in persuading the judge. As allowed by the law, Ethiopia had until the end of December 2006 to file its protest. The Trademark Office will then review the arguments by both sides and render its decision.

Soon after the argument against Yirgacheffe as being generic crumbled, the party lead by NCA and Specialty Coffee Association of America (SCAA) has modified the same argument to suit their case against Harar and Sidamo. According to their assertion, there is no direct parallel in terms of histories between the terms Yirgacheffe and Harar. They try to present Harar as an old term with a long history for a traditional coffee type and known to roasters and importers for a long time whereas, they argue, Yirgacheffe coffee as a brand was created during or sometime after the 1970s; therefore, the words Harar and Sidamo, unlike Yirgacheffe, are generic.

Ethiopia, on the other hand, says that no matter how long the names have been in the vocabulary of the roasters and importers, the names Harar and Sidamo do not mean anything (in the U.S. market) to the consumer other than as quality coffees. Ethiopia further argues that if consumers indeed associate the names to quality coffees only and are willing to pay a higher price, then Harar and Sidamo have achieved "secondary meaning" status on their own merits, thus qualifying as trademarkable.

Ethiopia is determined to achieve recognition for its trademark rights through either federal registrations or voluntary acceptance. After achieving recognition, Ethiopia’s strategy is a long term scheme aimed at promoting the coffee brands to consumers so that they, like the roasters, make the differentiation between Harar, Sidamo, Yirgacheffe, and other coffees based on their distinct qualities. By doing so, Ethiopia believes, in the long future, it will be well positioned to control the use of the marks of the specialty coffees in the distribution of those products. This will allow Ethiopia to seek a commitment from licensed roasters and importers to use the marks within guidelines established by the government and industry stakeholders in Ethiopia (including paying higher prices), thus establishing a foundation to realize the economic benefits in the long run.

While the expensive federal registration process is underway, Ethiopia is simultaneously asking Starbucks and other companies to sign a nonexclusive, royalty-free licensing agreement. The agreement acknowledges Ethiopia’s rights in its trademarks to identify coffees and grants licensees non-exclusive rights to use the marks on products and in their promotion. Because the agreement is royalty free, companies are not being asked to pay any licensing fees to the government to sign. Rather, the agreement confirms acknowledgment of Ethiopia’s ownership of its coffee marks and provides the basis for Ethiopia to control the terms by which the marks can be used in the market.

To date, fewer than twenty companies have signed this agreement but Starbucks is not among them. Starbucks neither signed the licensing agreement nor acknowledged Ethiopia’s rightful ownership of the names. Instead, to the surprise of many, Starbucks pronounced the licensing agreement as illegal. The Ethiopians shrug this argument off adding that if it were indeed based on a matter of legality that Starbucks is not signing the licensing agreement, the company would leave the case, without interference, for the USPTO to decide according to the law.

Starbucks’ resistance to Ethiopia’s efforts to control the coffee names backfired almost automatically. Oxfam, the not-for-profit, anti-poverty, organization interfered in support of Ethiopia’s efforts to assert its legal rights. Oxfam later launched a campaign and a public call to Starbucks “urging Starbucks to honor its public commitments to its coffee growers by signing Ethiopia’s licensing agreement to affirm the country’s rights in the trademarks associated with some of its finest coffees.”

The dispute uncorked voices of the already skeptic Fair Trade activists and human rights advocates. This lead many to scrutinizing Starbucks as a corporate giant from various angles including the company’s touted Corporate Social Responsibility, C.A.F.E. practices, and business ethics. The company’s attempts to contain the fire further drew unintended consequences of painting a picture different from what the company has positioned its brand to stand for.

Starbucks confronted Ethiopia’s IP strategy at a risk of endangering the company’s perceived image though the company is not the only one concerned by the efforts to trademark the world’s well known coffee names. Some other members of the SCAA also share Starbucks’ perspective but none of these companies has come out public with their opposition.

As various sources indicate, the untold major fears of the coffee roasters and importers are two fold: 1) Ethiopia may discard the licensing agreement and resort to levying royalty fees in the future, and 2) this sets a precedent for other coffee growers to follow suit.

The licensing agreement offered by Ethiopia recognizes the country’s “intent to secure, enhance, and manage Ethiopia’s coffee trademarks in collaboration with farmer marketing cooperatives and others in the Ethiopian coffee sector.” But members of the coffee industry do not trust these words. Some have expressed their fears that the government might abandon the agreement if it is offered a good chunk of money in exchange for a monopoly of the trademarks. The government insists that the stakeholders group which includes farmers’ cooperatives would not abandon the agreement they have all agreed up on.

The fear of setting precedent is the last secret any company dares to share with the public because doing so would amount to adding one more ingredient before tainting a brand. Nevertheless, the thought of it by itself reveals the lack of flexibility on the part of these corporations to the changing situations in the world. The trademark issue is more than a question of trade; it has already shaped itself as a rights issue. Meanwhile, if Ethiopia succeeds in securing an equitable leverage in international coffee trade by making use of IP laws, Starbucks’ refusal will not stop say, Guatemalan Antigua coffee from registering as a trademark. Indeed, this is not only a matter of rights but also an irreversible natural course of international trade - a phenomenon in development since the demise of colonization.

The world is changing but the big corporations’ propensity to adapt to changing realities is still at the learning curves.


Materials from sources not sited here have been used in this report. Information is also taken from the podcast by Nicholas Sho with sincere thanks.