HI5015 Legal Laws and Application: The Coffee War of Starbucks and Ethiopia Assessment Answer
Legal laws and application
In the report we will discuss about a world famous dispute which was occurred between two major coffee concerned business unit and state i.e. Starbucks and Ethiopia. The dispute is popularly known as The Coffee War. The dispute was held in year 2007 between an US coffee chain named as Starbucks and a country situated in Africa known as Ethiopia.
Starbucks Battles Ethiopia over Trademark Certification
Starbucks is an American coffee company founded in year 1971 and converted into a public corporation in year 1992 by completing its first IPO. It is an American coffee chain which has its several coffee shops in different countries. On the other hand Ethiopia is the country which is highly dependent on the income generated from the export of coffee. The Ethiopian government found that by making the export of coffee to different buyers the farmers was not getting the sufficient amount for their sells (Watson, & Streatfeild, 2008). Hence to remove the discrepancy between the prices and to earn more prices for their coffee, the government of Ethiopia has decided to get the trademark for their special coffee beans. In year 2005, the Ethiopian Intellectual Property Office (EIPO) filed an application to trademark the names of their three coffee beans Yirgacheffe, Sidamo and Harrar. However, the country’s trademark was successful in several other countries i.e. Canada, Japan etc. but in United States such trademark was opposed by Starbucks. As Starbucks has already applied for the trademark in the name of Shirkina sun-dried Sidamo, the trademark application of Ethiopia could not move further till the decision of application of Starbucks was done. Hence, the Starbucks was requested to withdraw its claim but it did not agree with the same. Also Starbucks said while expressing its concern for the farmers of Ethiopia that it could harm the farmers as more legal complexities would stop the companies from purchasing fair trade coffee and it would ultimately affect the income of the farmers.
Almost half of the country Ethiopia based on the sale of coffee so it would also affect the total income of country (McMurtry, 2009). Some arguments was also emerged that the country’s government was trying to establish its control over the use of produce to profit off the situation (Brownell, 2009). The complete control of government would prevent the use of coffee for other countries and also allocate small money to the coffee growers. For avoid such excess control over the Starbucks claimed to issue a geographical certificate mark instead of a registered trademark. The geographical certificate mark allows the others to use the product which is bearing the mark originated in certain country. This strategy has been used by several countries to certify the products by their geographical identity. Unless the trademark it provides the holder an ability of use the name of branding but does not restrict the product. The system was considered as far more effective than the system of a registered trademark which imposes restriction on the use of name of any branding.
This case was one of the biggest coffee war case which was held due to the dispute of two coffee selling companies. In year 2006, the long-running dispute was settled by reaching an outline agreement for both the parties under which the Ethiopia’s ownership of coffee brands was recognised. The case went through the several trails and assessment of the facts, documents and hearing was seen over this case. It was analysed that after Starbucks dropped its application for Shirkina sun-dried Sidamo, the NCA was argued that the names could not be trademarked as they were used to identify the product. The office approved the application for trademarking of Yirgacheffe but refused to trademark the Sidamo due to its generic name and also ordered to Ethiopia to prove that Harrar was not a generic name to address the type of coffee (Raynolds, 2009). This resulted to the big conflict between both parties and legal implication was seen over the undertaken case.
Both the parties to dispute was agreed upon an agreement made between them regarding licensing, distribution and marketing of Ethiopia’s best known coffee names i.e. Sidamo, Harrar and Yirgacheffe. The parties said that the agreement would help them to continue and expand their ongoing collaboration. Court in its judgement held that both parties are legal bound to comply with the legal terms and rules of the undertaken agreement and any of the party if fails to comply with it may result to high penalty. As the part of agreement the Starbucks has agreed to promote Ethiopia’s coffee in its stores and to recognize Ethiopia’s ownership over such coffee names. As a result of which, in year 2009, court held that the price collected by the farmers of Ethiopia has increased substantially since the agreement. Also the total export of coffee from Ethiopia is expected to increase in upcoming years. Therefore, in the case of Trademarking Coffee: Starbucks Cuts Ethiopia Deal,, May 8, 2009, it was held that Starbucks has agreed to promote Ethiopia’s coffee in its stores and to recognize Ethiopia’s ownership over such coffee names (Bäckman, 2009).
The dispute was related to the trademark of coffee beans which was proposed by the Ethiopia for obtaining the trademark for its best known coffee beans Yirgacheffe, Sidamo and Harrar and such proposal for trademark was opposed by the Starbucks.