Common Law Rights vs Trademarks

The recent agreement between the Government of Ethiopia and Starbucks is, unfortunately, breeding more questions than answers, the main reason being the parties’ choice to keep the settlement of the long-fought trademark dispute secret. Senior government officials who signed the agreement on behalf of Ethiopia's coffee sector cite a confidentiality agreement they have signed with Starbucks as an excuse for not disclosing the details.

Dr. Samuel Assefa, Ethiopia’s Ambassador to the US and Getachew Mengistie, Director of Ethiopian Intellectual Property Office (EIPO) have, however, shared some of the major elements of the agreement which are not bound by the confidentiality agreement during this interview. During the interview, they hinted that one of the major benefits the agreement brings for Ethiopia is that the country’s common law rights to the trademarks, Harar, Sidamo, and Yirgacheffe are recognized where the law applies.

To find out what comfort such common law rights provide to Ethiopia, I forwarded some questions to a few intellectual property lawyers here in the US and sought for their professional advice. How is a common law right explained and what are the consequences to Ethiopia? There is a consensus in their responses, so I used the one representative explanation for this posting.

In the United States, trademark rights arise through use. Meaning, if a mark is used in connection with goods or services as an indicator of source (i.e., if it's used as a trademark), then the holder has trademark rights. Those trademark rights can stop a late-comer from using a confusingly similar mark in connection with goods or services. To that extent, the owner of a common law mark has the exact same rights as the owner of a federally-registered mark.

The main differences between rights stemming from registration and those stemming from common law are that federal registration: (1) gives the beholder presumption of being the exclusive owner of the mark in the United States, (2) the mark will be cited by the United States Patent and Trademark Office (USPTO) against future applicants wishing to register a confusingly similar mark, thereby preventing some confusingly similar marks from becoming registered, and (3) the presumed owner can use the "circle-R" (®) designation to indicate to third parties that they should not adopt a mark that's close.

Depending on the terms of agreement, therefore, common law rights might give Ethiopia, at least in the US, not only the temporary protection during the contract period, but also may lead to developing a viable brand in the long run. That is, assuming that all (or most) US distributors recognize Ethiopia as the sole owner of the marks and continue to work with Ethiopia in promoting the names for a longer period of time – long enough to distinctly identify the product “coffee” and acknowledge that “Sidamo” is the only source of that distinct brand, the prospects for Ethiopia to tap into the benefits of branding are real.

The drawback of common law right protection is, however, that it does not render any assurance against potential brand infringements, especially where the brands are not accepted for registration as trademarks at Patent and Trademark Office.

According to the experts, should disputes arise with owner of a confusingly similar mark, the burden of proof will be on the plaintiff trademark owner who is attempting to assert its rights against a third party owner of a confusingly similar mark. In addition, the owner at the end of the day must prove use of the mark, and that burden of proof is the same regardless of whether the mark is registered. This is the case regardless of whether a mark is registered.

Also, enforcement of trademarks either way is expensive and probably not practical in every instance of infringement. That's why the prophylactic rights of registration are important -- they help prevent infringement (and consequently avoid expensive enforcement) before it occurs.

Common law is a valid form of trademark rights in the United States but not all countries have the same system as in the US where rights stem from use rather than registration. So, in some countries, Ethiopia does not have any rights at all unless the mark is registered.

The application of common law rights outside of the US will be one of the questions awaiting the government’s response. Also, the question of what EIPO plans to enforce the trademarks even in countries such as the US will need to be explained. What Starbucks offered towards these will remain unknown – for some time. As a result, the question of what the farmers are going to be subjected to because of the agreement will continue to be the driving force.