A few days ago, I noted how Starbuck’s is alarmed that its fierce expansion and efficiencies had “commodified?” the coffee shop experience and thereby eroded its social drama and charm. Yesterday’s Wall Street Journal (March 5) describes another case of “blowback” that Starbuck’s has itself engendered by its ethic of over-propertizing life. In this case, Ethiopia has taken a cue from corporate multinationals, and decided that if it is going to get its fair shake from foreign trade, it needs to trademark the names of several of its prime coffee-growing regions — Yirgacheffe, Harar and Sidamo. This has not set too well with Starbuck’s, which spent months trying to twist the arms of top Ethiopian officials not to apply for the trademarks, even though Ethiopia planned to offer a royalty-free licensing agreement.
With its enormous market power, Starbuck’s showed a sense of entitlement, even hauteur, in its dealings with Ethiopians. Starbuck’s’ Senior Vice President for Coffee and Global Procurement, Dub Hay, told the WSJ, “The gift that Starbuck’s can bring to the [Ethiopian] coffee farmer is the guarantee of more business next year.” And what might that be? About 75 cents per pound. That’s what the Sidamo Coffee Farmers Cooperative Union got for its 2005-2006 crop. Starbuck’s seems to be saying that Ethiopian coffee farmers should be darn grateful for anything they get. Starbuck’s’ business is a “gift,” after all.
Starbuck’s was bit surprised, then, when Ethiopian farmers and government officials dug in their heels and insisted upon seeking trademarks for the names of its coffee-growing regions. “The more our coffee is known, the more demand will grow. As demand grows, price grows, and there will be more money for the farmers,” said the director general of Ethiopia’s intellectual property office.
One can imagine the uproar back in Seattle. For different reasons, I am not thrilled that the burgeoning property ethic is now expanding into yet another area of life, one that involves owning the names of places. Yet who can blame struggling Ethiopians for trying to get a fair deal for their product when they have so few competitive advantages (beyond some great coffee) in dealing with the West? After preaching about the sanctity of intellectual property and the horrors of piracy, here is a nation that is taking such talk seriously — only to get slapped down by the West.
The National Coffee Association, an American trade group, naturally argues that coffee-growing place names should be considered generic. Here is another instance of the “romance of the public domain.” Intellectual property scholars Anupam Chander and Madhavi have argued, in a lardmark 2004 article published in the California Law Review, that the West is only too eager to declare certain resources in developing nations — plants, genes, names — as elements of the public domain open to all (especially well-heeled corporations). The West meanwhile insists that its own resources and products be strictly respected as private property.
When the Ethiopian government applied for three trademarks in the United States, it won a trademark for the name “Yirgacheffe.” But the U.S. Patent and Trademark Office rejected the application for “Sidamo” because Starbuck’s had already applied for a trademark for the name, “Shirkina Sun-Dried Sidamo.”
Nice, eh? Starbuck’s hadn’t even told the Ethiopians or the co-op farmers what it had done. It just appropriated the name. “If anyone should have the trademark,” said the chairman of a coffee farmers co-op, “it should be us. Our name is the most important thing we have.” After Oxfam protested, causing a blemish on the company’s brand image, Starbuck’s later changed the name of the coffee to “Ethiopia Sun-Dried Shirkina.”
The National Coffee Association (whose government affairs committee is headed by a Starbucks executive) officially protested the trademark applications for Sidamo and Harar. Both applications have been provisionally refused, although Ethiopia is appealing the cases.
Ethiopia supplies just 2% of Starbuck’s’ coffee, so this trademark battle is small stuff in the company’s larger scheme of coffee procurement. The real stakes here involve Starbuck’s’ brand image, which is surely considered a more influential draw to customers than Ethiopian coffee. Starbuck’s touts itself as a leader in corporate social responsibility, and spends a lot of money burnishing that public perception. A tale of corporate bullying such as this one easily trumps any warm-and-fuzzy self-promotion that the marketing department churns out.
Starbuck’s cannot be happy, either, about the worrisome precedent that may be set here. A coffee-supplying nation is actually standing up to defend its sovereign interests! Starbuck’s is surely not eager for Ethiopia to become a conspicuous example that other small coffee-growing nations might emulate. Better to peddle feel-good tales of Western benevolence than have to negotiate with truly equal trading partners.
Memo to Starbuck’s: If you’re going to parade yourself as a socially innovative and conscientious company, then bear the burden of real leadership. Walk the talk. Empower trade partners. Don’t give us legalistic spin. Reputation and customer goodwill are not commodities that can be bought and sold. They are holistic and indivisible. A breach in one area suggests a taint of the whole.
The Starbuck’s/Ethiopia story underscores once again that a corporate image is just a merchandised perception. The real challenge is to cultivate an enlightened spirit of business that is operative even when no one’s looking. That means learning to get beyond the strict property ethic and bottom-line sensibilities that seems to imprison even well-intentioned companies.
For a refreshing contrast, I commend the socially empowering trade practices of Dean Cycon, founder of Dean’s Beans of Orange, Massachusetts. Dean is a big-hearted, socially innovative pioneer that could teach Starbuck’s a few things.