Starbucks and Ethiopia Make Bad Blend

ROME, Oct. 26, 2006 — -- Every morning, millions of Americans taste one of life's simple pleasures -- coffee.

It is hard to imagine the high-rolling world of global economics spilling into that morning cup of your favorite blend.

But there is a potentially titanic trademark battle brewing between multinational giant Starbucks and Ethiopia, the home of coffee, and an impoverished nation on the horn of Africa.

The Ethiopian government filed for copyright last year to trademark its coffees. Names like Harar and Sidamo are familiar to Starbucks clients around the world.

Securing trademark rights to those names would mean a spectacular rise in Ethiopia's coffee revenues -- a jump in the neighborhood of $88 million.

The most critical dividend would go to Ethiopia's struggling coffee farmers -- 15 million people, many of whom live on less than a dollar a day.

But the Ethiopian government and Oxfam, a Britain-based nongovernmental organization helping Ethiopian farmers reap some of the rewards of the multibillion-dollar global industry, say Starbucks is trying to block Ethiopia's attempts to register its famous coffees.

"Starbucks is using its influence on the National Coffee Association to block this application in the U.S.," said Gwenllian Griffiths at Oxfam's London office.

Griffiths says the "official" objection to the U.S. Patent and Trademark Office came from the coffee association, but she says Oxfam has proof that Starbucks is behind the action.

"We have three people willing to go on record who held meetings with the NCA who said it was Starbucks who brought Ethiopia's application to the NCA's attention," she said.

Starbucks maintains it has never filed an opposition to the Ethiopian government's trademark application.

However, Jo Sorenson, a representative at one of Starbucks overseas offices, indicated that Starbucks believed Ethiopia's approach was ill-advised.

"According to the National Coffee Association of America, the trademark application is not based upon sound economic advice and that the proposal as it stands would hurt Ethiopian coffee farmers economically," Sorenson said.

Sorenson told ABC News that Starbucks had sent a letter to the Ethiopian government on Oct. 25, offering to work with the Ethiopian government to help it develop and implement a certification program.

Well-known examples of "certification" are Idaho potatoes and Florida orange juice.

Sorenson says these systems are better than registering trademarks: "A trademark identifies the manufacturer of a product while a certification mark informs consumers a product bearing the mark meets certain standards."

Starbucks sees this as the best way to promote Ethiopian coffee, and boost sales and revenues to the country and ultimately the farmers.

Right now, Starbucks says it's paying roughly $1.23 for a pound of Ethiopian coffee, which it says is 23 percent above the real market price.

Oxfam and Ethiopia point out that Starbucks, and other coffee shops, can sell that pound for as much as $30.

The Ethiopians believe that registering the trademark would allow coffee producers to charge about $2 for a pound of coffee beans.

Oxfam says that's a drop in the bucket for a company like Starbucks whose annual revenues are about 75 percent of Ethiopia's total GDP.

While it's difficult to quantify the impact of the proposed "certification" proposal, it's believed that if Ethiopia's trademark application is awarded, it would boost the country's coffee earning by as much as 25 percent.

Tadesse Meskela represents 78,000 Ethiopian coffee farmers in the Oromia region.

He said winning the trademark application was vital to the farmers' livelihood.

"It will help them feed their families, send their children to school, and give them access to things like clean water supplies," Meskela said.