Legal context Collective trademarks offer an adequate institutional setting to create clusters. The legal framework provided by this form of IP right offers an enabling environment for the creation of cooperative business arrangements, as applied in clusters. In particular, they allow small- and medium-sized enterprises to intensify their degree of interaction, so to build up networks, thus reducing costs and dependence on large firms, while at the same time increasing systems of collaboration.
Key points While the positive externalities provided by clusters are well researched, the IP aspect has been largely ignored. This is observed in theory, as well as in practice. While the business literature is rich on empirical and theoretical arguments on the functioning of clusters, the role IP law takes in the creation of clusters has gone largely unnoticed.
Practical significance This article seeks to provide the missing link and explain why, how, and under which circumstances the application of collective trademarks is a crucial element for the creation of clusters. While the first part of this paper provides the theoretical underpinning, the second part offers an overview of various empirical illustrations of the argument.