Kaldi’s in Addis Ababa, Ethiopia (@outoftheashesinc.korah/Facebook)
When Kaldi’s (known as Ethiopia’s Starbucks) opened its doors, it was based on the famous Seattle brand. Its owner, Tseday Asrat, decided to open a carbon copy of the famous coffee house after negotiations with the the US-based company failed.
With legal challenges hanging over her business, she has since been forced to change much of the menu, the colour of her café – from green to orange and invest in a complete overhaul of the establishment.
International brands booming, but laws need attention
Such sought-after US brands are coming to the capital. In the last two years, following partnerships with Ethiopian tycoon Aschalew Belay and his Belayab Group, there is now Pizza Hut, Cold Stone Creamery and a Burger King due to open later this year. The entrepreneur, who owns the international hotel group Golden Tulip and a shipping business, is expected to lure more US brands.
With Ethiopia resuming WTO accession negotiations after an eight-year pause, brand piracy is expected to play a dominant role in the negotiations.
Ahead of talks, Ethiopia has promised to revise its law in relation to the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS agreement). This includes the ratification of new IP laws in areas where very few – if any – existed before and revising current ones, particularly its patent law.
As Ethiopia aspires to join the World Trade Organisation (WTO), more international brands are taking local fake trademark users to court and winning.
One major area of scrutiny by WTO members has been Ethiopia’s intellectual property (IP) regime; or lack thereof. As part of its accession process, a number of issues were flagged regarding its IP regime.
Those flags stem from common practice in the country of brand piracy.
The latest brand battle was with In-N-Out burger, the US fast-food chain. It won its case against a local brand of the same name, forcing the restaurant to change its name to In-Joy Burger and pay compensation. The Ethiopian burger joint officially changed its name on 31 December 2020.
In-Joy Burger, formerly known as In-N-Out Burger Ethiopia. / Facebook
The In & Out saga was a legal battle that lasted for almost six years that began in 2014 after a tourist who was visiting the local eatery complained to its US operations, which started its operation in 1948 and which has been struggling to get recognition from the Ethiopian Intellectual Property Office (EIPO) for years.
Brand piracy has been around…
Brand piracy is not new in Ethiopia. And with one of the fastest-growing economies in the region, there has been a slew of knock-offs. These ‘local’ brands include: Intercontinental Addis Ababa, ZARA, KKFC (Kaptain K Fried Chicken) and Kaldi’s.
KKFC, which opened in 2018, has two locations in the capital offering fried chicken and other products using KFC’s marketing strategy and slogans.
KKFC Ethiopia / Facebook
Intercontinental Hotel Addis Ababa, which is boycotted by the US Embassy in the capital, was erected near the United Nations compound and named itself without the getting approval from Intercontinental Hotel International. The latter took the case to court and has been winning court victories.
The highest court in the land awarded the international brand financial compensation and royalties two years ago and asked the local business to change its name.
But, with weak enforcement of court judgments, the name still stands.
Loopholes to stay ahead
A growing number of international brands have been looking to invest in Ethiopia as a result of its economic trajectory in recent years. But with local businesses profiting from the country’s weak intellectual property rights protections, some international investors have stayed away.
For years, Ethiopian businesses have avoided investing in local branding, opting instead to focus on using established mostly US brands.
“It’s like cheating on an exam to copy the other person’s name as well. When you visit such places you only find that the name, logo, visuals and product titles are similar, but it’s different from the original quality and service,” Samuel Alemayehu, a local brand strategist tells The Africa Report.
Experts also see it problematic that international intellectual brand property is not enforced in Ethiopia because it can tarnish the brands’ reputations.
“Local businesses copy the brand visuals or products but not what the brand stands for,” adds Alemayehu.
One restaurant named Subway began to sell foot-long hamburgers and local Ethiopian delicacies before it closed down two years ago.
Now appearing in the apparel sector
Though the practice of brand piracy is fading in the hospitality sector, it’s becoming common in the apparel sector with brands such as Puma, Nike and Adidas being slapped on made-in-Ethiopia products, manufactured with lower-quality materials and cheap made-in-China imports with fake branding.
This is believed to be the strategy for many: not spending much on branding or marketing, and not incurring costs for brand promotion, but reaping the benefits of established products.
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One reason why this strategy continues to work is the perception that local brands are inferior compared to international brands, according to a retailer.
“There is a tendency to trust international brands over locals. So, I always prefer buying products, local or Chinese made and tagging international brands since customers prefer them no matter the quality of those made locally. Even items we import from China, we place American brands on them,” Girma Moges, a store owner in Merkato, Addis Ababa’s famous open market tells The Africa Report.