Counterfeits, Compliance, and Cooperation: The European Commission Release its 2025 Biennial IP Report

Every year, IP-intensive industries, such as pharmaceuticals and software, comprise the lion’s share of Europe’s trade. In 2024, products from these industries totaled 80% of the European Union’s exports. Yet in 2023 alone, the EU seized over €3.4 billion worth of counterfeit goods. Globally, trade in counterfeit goods accounted for 2.5%—or $461 billion —of all international trade. For a customs union so reliant on strong intellectual property protections, global piracy presents a serious economic threat. As part of ongoing efforts to address these concerns, the European Union recently released its biennial Intellectual Property Rights in Third Countries, Counterfeit & Piracy report. 

The report represents the foundation of the EU’s intellectual property strategy, outlining expectations for trade partners, ongoing and planned initiatives, and providing a list of markets and countries with “insufficient” enforcement of EU intellectual property. By setting clear expectations and naming violators, the EU hopes to steer negotiations with trade partners and push noncompliant markets to align their policies with EU IP standards, a measure especially important for online markets. 

Included in the report was a list of particularly problematic trade partners. These countries were categorized into three levels of priority based on the degree to which governments were complicit in ongoing EU IP violations. 

China made the distinction of being the sole country with a first priority designation. Despite recent improvements in IP protection, the European Commission additionally cites concerns over discriminatory policies, with European companies often facing greater difficulty in the patent application process, as justification for China’s top-priority ranking. 

The European Commission alleges that due to China’s unclear patent system, discriminatory policies, and poor enforcement, China has become the largest source of counterfeit products, with 65.7% of IPR-infringing goods originating from China. 

Besides China, India and Türkiye share the second priority designation. Both are stated as having “systemic failures” in their IP enforcement mechanism. 

Argentina, Brazil, Ecuador, Indonesia, Nigeria, and Thailand fall under the third priority designation. While all have existing IP protections, most face gaps in enforcement and a lack of state capacity in the realm of IP management resulting in long waiting times and difficulties in the patent registration process. 

These efforts are further bolstered by EU-funded initiatives meant to harmonize global IP standards. EU-backed programs such as the Intellectual Property Rights and Innovation in Africa (AfrIPI) project, the Association of Southeast Asian Nations Regional Support (ARISE Plus) program, along with ongoing talks between the South American trade bloc MERCOSUR (Southern Common Market) and the EU, represent bilateral efforts to raise other markets to Europe’s IP standards.

The European Union’s preferred method for addressing IP issues is cooperation; The EU aims to encourage voluntary compliance through technical assistance and state capacity-building programs, but the report also outlines actions in the case of noncooperative state and non-state actors. 

Available along with the report is the EU’s piracy list: a catalog of “the reportedly most problematic online services and marketplaces”. This list is meant to steer local enforcement and discourage businesses and consumers from engaging with entities generating harm through violations of EU intellectual property rights. The EU also clarifies criteria for retaliatory sanctions while advocating for their expanded use to dissuade future noncompliance.

With IP-intensive industries comprising the foundation of Europe’s ever digitized economy, the EU is required to adhere to stringent IP guidelines. Amid ongoing tensions with the United States, the EU’s release of its report following the publication of the US’s own 36th annual Special 301 Report on IP—highlighting similar issues and many of the same countries—signifies a shared commitment to strong global IP protections. 

By outlining its expectations, launching initiatives to improve global enforcement, creating an anti-piracy watch list, naming problematic nations, and expanding the role of sanctions in IP enforcement, the European Commission has set a clear tone for its future efforts to combat IP violations and protect European businesses, working toward a world more favorable to Europe’s largest companies.