US coffee chain Starbucks is denying Ethiopia earnings of up to USD 88 million a year, the charity Oxfam claimed this week.
According to reports, Oxfam said that Starbucks asked the National Coffee Association (NCA) to block Ethiopia's bid to trademark two types of coffee bean in the US. The move would have given farmers a greater share of profits, it claims.
But Starbucks denies approaching the NCA, and the association says Ethiopia is being badly advised and there is no economic case to back Oxfam's views.
Last year, the Ethiopian government filed applications to trademark the coffee bean names Sidamo and Harar in US courts.
Oxfam claims that Starbucks flagged up the application to the NCA, of which the firm is a leading member. The NCA then filed its opposition at the US Patent and Trademark Office.
Oxfam's Phil Bloomer said his organization had worked with Starbucks in the past and appealed to the firm to "act responsibly". "Their behavior on this occasion is a huge backwards step and raises serious questions about the depth of their commitment to the welfare of their suppliers," he said.
But Starbucks senior vice president of coffee procurement, Dub Hay, denied approaching the NCA to oppose the Ethiopian move. "We did not get the NCA involved, in fact it was the other way around, and they contacted us."
Robert Nelson, head of the NCA, backed Mr. Hay's claim, adding that his organization opposed the Ethiopian move for economic reasons. "For the US industry to exist, we must have an economically stable coffee industry in the producing world," he said.
"This particular scheme is going to hurt the Ethiopian coffee farmers economically."
He claimed that the Ethiopian government was being advised to price itself out of the market and that the trademark move would reduce demand for its coffee.
Oxfam said the NCA and Starbucks should not dictate to Ethiopia how best to sell its products.
Ron Layton, president of Light Years IP, which is advising the Ethiopian government on the matter, said Ethiopia doesn't want to charge a flat fee as part of the licensing agreement.
But he said the long-term plan would be to establish the brand and then use that leverage to gradually boost the prices that companies like Starbucks pay for those coffees.
Ethiopia is also working to secure the rights to the three coffee names via the U.S. Patent and Trademark Office. The country has succeeded in its attempt to trademark the name Yirgacheffe, but a final decision has not been made on the other two. A coffee trade group of which Starbucks is a member, the National Coffee Association of U.S.A., has filed protests arguing that the names are generic.
Sean O'Connor, an associate professor of law at the University of Washington, said he thinks it would be costly and difficult for Ethiopia to maintain the trademarks on the coffee types, if it received them. If it failed to constantly work to enforce the trademarks, the country would risk losing them, he said.
Also, O'Connor said, trademarks may not produce higher prices, arguing that it might make more sense to seek the geographic certification for Ethiopian beans, much like wine growers in France have done with the word "champagne." That's the type of process Starbucks also is suggesting.aff
- 104 Globalization
- 208 Regulation