Big bucks: IP protection at Starbucks

It is difficult to walk down a shopping street in London without seeing one. New York alone has several hundred. Argentina, Ireland, Thailand and Bulgaria all boast branches. Starbucks is, seemingly, ubiquitous. And that’s just the coffeehouses.

Add the countless references to the brand in Hollywood films, US TV shows, newspapers, magazines and on the Internet, and you could be forgiven for thinking that no corner of the globe remains untouched by the Seattle company.

However, despite impressions to the contrary, Starbucks does not have outlets everywhere. And if it doesn’t have outlets everywhere, entrepreneurs in those places where there are no well-known coffeehouses might take the opportunity to ride on the back of the Starbucks brand to attract new custom.

Tracking down and dealing with this kind of infringement is one of the tasks facing Batur Oktay and Kim Teraberry, Starbucks’ corporate counsel responsible for IP. Given that they manage approximately 10,000 trademarks, it pays to be vigilant.

“I think we’re pretty aggressive about it—we have stores in more than 50 countries so we have partners [Starbucks’ employees are known as partners] in more than 50 countries, and we have so many millions of customers and whenever they travel, we get reports of infringement very quickly,” says Oktay.

“We have a customer service phone line and email address so a lot of concerns come in that way, and then we also have a legal email address: copycat@starbucks.com. We get a lot of material sent to that email address and we check it daily, sometimes multiple times a day.”

And it’s not just customers and partners that pick up the phone to sound the alert. Teraberry says: “We also use watch notices, we have our investigators in Asia, outside counsel, and then other trademark owners sometimes too will notify us of infringements.”

Some of the infringements are blatant copies, some are distortions of the company’s ‘siren’ logo and others are (sometimes inappropriate) corruptions of the Starbucks name itself. Even the coffee blends the company uses are targets. Teraberry says that “some of the logo infringements can be pretty entertaining”.

"We have millions of customers and whenever they travel, we get reports of infringement very quickly.”

The approach to infringement varies depending on its gravity and location, but Oktay explains, once the company hears of a potential problem “depending on the country, we’ll contact counsel. If we need an investigation then we’ll conduct an investigation and then see what the matter merits—a letter, a phone call, if it’s really an infringement, if it’s actionable or not.”

Normally, the first course of action is to send a cease and desist letter to the party Starbucks suspects is infringing; this can resolve the issue or sometimes lead to further negotiations. Litigation is a last resort, but that doesn’t mean the company won’t use it if necessary.

“In most countries, we can resolve things through cease and desist letters, but in some countries—China and Russia for example—that doesn’t always work,” says Teraberry. “It’s really the sheer volume of cases that can be a challenge and some of them are in more remote areas so it might take us longer to find out about them.

"There might be a two-storey ‘Starbucks’ that has the look and feel or the exact logo, or the Chinese name is infringed quite a bit. But they’re pretty blatant and, a lot of the time, a cease and desist letter doesn’t tend to work.”

Indeed, the company has experience of litigating cases in China—in 2006, it successfully won a case in Shanghai against Xingbake, a Chinese imitator. ‘Xing’ means Star in Chinese, while Bake sounds like Bucks. The company also used a green logo that looked similar to Starbucks’.

The case went to court, which found in favour of Starbucks, fining Xingbake and ordering it to cease the infringement. “We’ve litigated so far in the bigger cities [in China]...so we haven’t had to deal with some of the remoter, maybe less IP-friendly courts,”

Teraberry says. Clearly though, not all infringements take place in developing countries. For trademark enforcement, the company uses a hub and spokes model, working directly with outside counsel across the world. There are four attorneys in-house working on trademarks, who each take a geographic zone as their responsibility.

So while China might pose particular difficulties, Starbucks is as likely to have to deal with infringement closer to home. In recent years, it has had to deal with Sambuck’s, a coffeehouse in Oregon, Starbock beer in Texas, and in Canada, it had a dispute with the coffee company HaidaBucks for infringement.

Some were critical of these cases, especially the Sambuck’s matter, which was narrated in the popular media as a classic case of a big corporation bullying a small operator, whose only crime was to be called Sambucks.

Whether this is an accurate representation is doubtful, but in any event, an aggressive policy by definition has to apply across the board—not just to infringements that are particularly blatant. The key to all Starbucks’ trademark activity, no matter what the country, is flexibility.

“We’re pretty aggressive in protecting the brand. There are a lot of cases that are pretty blatant infringements, but for any case, we’re constantly evaluating strategies country by country, reality checks, budgets—all of that comes together when you’re deciding what strategy to take case by case,” says Teraberry.

Oktay adds: “I think it really depends on the particular degree, how strong our brand is, how many other marks there are that are similar—we sort of do it market by market, but I think generally we try and protect the core brands like Starbucks and the logo as broadly as we can.”

In Herman Melville’s Moby Dick, Starbuck is the first mate on the whaling ship Pequod. Loyal and conscientious, he would have made a good trademark attorney, believing that “the most reliable and useful courage was that which arises from the fair estimation of the encountered peril”.

As a brand, Starbucks relies heavily on a ‘fair estimation’ of the threats it faces—it’s a strategy that seems to be working.‘