Starbucks and Ethiopia in Heated Trademark Dispute

Ethiopia and coffee have a long history together. Ethiopian natives claim that coffee originated within their country. The name "coffee" itself is thought to have been derived from the Ethiopian city Kaffa. The parent plant to the coffee bean, coffea arabica, is indigenous to Ethiopia and has been cultivated there for over 1,000 years. Coffee is also Ethiopia's biggest export, and the Ethiopian Government is now seeking to capitalize on the growing popularity of specialty coffee that utilizes Ethiopia’s coffee beans.

In hopes of landing licensing agreements with different U.S. coffee chains, the Ethiopian Government recently set out to trademark the names of regions associated with the country's finest coffee beans: Sidamo, Harar, and Yirgacheffe. While some chains complied, Starbucks objected to the marks, and went so far as to release videos claiming that the marks do not comply with trademark law. Now, Ethiopia is fighting back, and some think that Starbucks is in danger of losing its identity.

The Ethiopian Government argues that trademark protection would protect Ethiopia's coffee farmers and add $117 million annually to the Ethiopian economy. Currently, Ethiopian farmers receive $0.75-$1.60/pound for coffee that Starbucks in turn sells for $26.00/pound. In other parts of the world, specialty coffee growers receive up to 45 percent of the retail price, well above the current 5-10 percent that Ethiopian farmers receive.

Brand protection and intellectual property strengthening are the goals of Ethiopia's trademark protection plan. Obtaining a trademark would also give Ethiopia a stake in the retail price of the coffee. Even though Ethiopia coffee represents a tiny fraction of Starbucks' coffee and expenses, the company continues to object to Ethiopia's actions. While Starbucks recently promised to drop its objections to the trademarks, it has not yet said that it would sign a licensing agreement, and so far no further action has been taken.