Intellectual property crime (IPC) damages the economy and can have a direct impact on public health and consumer safety. Physical counterfeiting and online piracy are hard to investigate, as most of the crimes are committed outside of the EU or involve online elements with digitally disguised perpetrators.
- Approximately 86 million fake items were intercepted in the European Union in 2022 with an estimated value of over EUR 2 billion. More than 72% of the products seized were games, packaging material, toys, cigarettes and recorded CDs/DVDs[1].
- The digitalisation of trade and transport has shifted most of the distribution of counterfeit goods online, moving the place of perpetration of the crime from the streets to the homes of victims by means of online shopping and services.
- The commodity sectors most affected by physical counterfeiting in the EU are the automotive industry, clothing and accessories, cosmetics and perfumes, foodstuffs, labels and packaging material, pesticides, pharmaceutical products, piracy and toys[2]. On the other hand, online media providers and the film industry suffer from online piracy.
Operational support to IPC cases
In 2023, the number of new IPC cases referred to Eurojust increased by 20% compared to the previous year. The Agency also handled 31 ongoing cases from previous years and supported two new joint investigation teams to tackle this crime area.
During 2023, Eurojust handled various counterfeit cases. One ongoing case involves an individual residing in Germany who engaged in the illicit procurement of substantial quantities of unlicensed medical products from third countries. This person, devoid of any medical qualifications or licensing, distributed these products to individual consumers. The perpetrator's monthly revenue from this illegal operation has been estimated to be EUR 100 000. In 2023, Eurojust supported the establishment of a JIT to investigate this cross-border criminal activity involving multiple European countries.
Another case handled by the Agency in 2023, which is still ongoing, concerns a criminal network operating in Central Europe engaged in the production and distribution of counterfeit detergents. The criminal network acquired raw materials different from those used in legitimate products and then mixed, packaged and labelled these substances in containers mimicking the original brands. The production of these counterfeit washing products took place in highly unsanitary conditions, posing a potential a health risk to consumers. Investigations have revealed that these counterfeit products were distributed throughout the European Union, both through unofficial markets and, in some instances, infiltrating the official supply chain. In 2023, in response to this widespread criminal activity, Eurojust organised a coordination meeting with the national authorities of the affected countries, laying the groundwork for establishing a JIT. The JIT, supported by the Agency, is now coordinating the judicial aspects of the investigations and forthcoming prosecutions.
The IPC Project
In 2023, Eurojust, via its IPC Project (financed by the European Union Intellectual Property Office – EUIPO), sustained its commitment to supporting national and EU efforts to combat crimes related to the infringement of intellectual property rights.
The IPC Project actively collaborated with partners in EMPAC on a range of actions targeting both online and offline IP infringement. This collaboration was crucial in ensuring that IPC cross-border investigations received the necessary judicial support and were effectively coordinated to guarantee successful prosecutions.
Moreover, during 2023, the project continued to build new knowledge, capacity and awareness by fostering a deeper understanding of IP rights enforcement through its targeted publications and events for judicial authorities and other stakeholders.
IPC publications
During 2023, the IPC Project published various awareness-raising materials in the form of reports and flyers. These resources are designed to educate and update members of the judicial community about critical issues and emerging trends that affect the enforcement of IP rights, as well as highlight best practices.
The study on generative artificial intelligence (AI) and its impact on IP crimes examines the impact of generative AI tools, including Chat GPT, Midjourney and similar technologies, on copyright-protected content. It explores the complexities surrounding the creation of art, music, literature and other intellectual properties by these AI programs, and the potential for copyright protection of such AI-generated works. The paper examines the methodologies used to train generative AI programs, scrutinising whether this machine learning process could inadvertently lead to copyright infringement. The adaptability of criminals to such new technological advancements poses significant challenges for law enforcement and judicial authorities, particularly in the area of intellectual property crime.
The IPC Case-law analysis is the outcome of the monitoring efforts on national case-law conducted by the IPC Project in 2022. This compilation includes a curated selection of national judgments pertaining to IP crime and serves as a critical resource to show how courts across EU Member States address legal challenges in this field. Key aspects of this analysis include a diverse selection of judgments, insights into legal approaches and emerging trends in IP Crime.
The Copyright Piracy Report addresses the escalating threat of using advanced technologies to commit large-scale IP infringement. The report focuses on international copyright law, adaptation in EU Member States, interpretation by national courts, technological advancements and challenges, and best practices and recommendations. The report serves as a comprehensive resource for legal practitioners, law enforcement agencies and policymakers, providing valuable insights and guidelines for tackling copyright piracy in the evolving digital landscape.
The flyer on advertising-funded online piracy presents a detailed analysis of how the advertising industry inadvertently contributes to the proliferation of online piracy. It focuses on the role of advertisements in financially sustaining websites and applications that distribute copyrighted content, often at no cost to the user, without the authorisation of the rights holders. The flyer provides national case-law examples of criminal copyright infringement where the involvement of advertising played a significant role. It highlights the need for more stringent measures and greater awareness within the advertising industry to prevent their services from being exploited by piracy sites.
The flyer on non-fungible tokens describes the growing use of non-fungible tokens (NFTs) in the art world. These unique identifiers, recorded on the blockchain, are used to verify the ownership and authenticity of a work of art. While the use of NFTs by artists is increasing, so is the risk of criminal actions related to them. One example of such abuse is converting artworks to NFTs and selling them without the artist's authorisation. The flyer examines the consequences for copyright and trademark protection and provides an outline of recent court decisions affecting this area, which still lacks a legal regulatory framework.
IPC events
The IPC Project hosted and participated in a series of key events in 2023. These events brought together experts, practitioners and stakeholders from various fields to discuss and exchange views on matters pertaining to IP rights enforcement.
In May 2023, Eurojust, with the support of the Estonian General Prosecutor’s Office, organised the first regional seminar on intellectual property crime investigations and prosecutions. The seminar, held in Tallinn, Estonia, gathered police investigators and prosecutors from the Czech Republic, Estonia, Latvia, Lithuania, Poland and Slovakia to discuss regional challenges, opportunities and best practices in investigating and prosecuting IP crimes. The seminar also played a crucial role in reinforcing and broadening the network of IP crime practitioners, thereby enhancing collaborative efforts across the region.
In September 2023, Eurojust, in collaboration with EUIPO, organised the annual workshop of the European Intellectual Property Prosecutors Network. The event provided a valuable opportunity for practitioners to discuss recent instances of counterfeiting and copyright piracy. In addition, participants exchanged materials and updates on ongoing initiatives in the area of IP enforcement, thereby enhancing each other’s capabilities to address the challenges posed by this crime.
In November 2023, Eurojust organised an online workshop on copyright piracy. The event brought together judicial and law enforcement practitioners from five jurisdictions who presented recent case studies and shared experiences in spearheading or assisting complex piracy investigations and prosecutions. The proliferation of unauthorised illicit internet protocol television and streaming services poses unprecedented challenges for judicial and law enforcement authorities who are faced with increasingly complex cases requiring technical skills and an understanding of technology. Furthermore, investigations have revealed that organised crime groups are not only involved in sophisticated counterfeiting and piracy operations but are also using the proceeds from these illicit activities to finance other criminal activities.
In 2023, the IPC Project, in association with the U.S. Department of Justice, initiated a series of monthly online lectures focusing on intellectual property enforcement. These lectures, featuring speakers from the EU and United States, examined an array of case studies, methodologies and tools essential in combatting criminal infringement of IP rights. The 2023 lecture series addressed topics such as trade secret violations, illicit internet protocol television, counterfeit pharmaceuticals, concealed hyperlink infractions and methodologies for calculating damages. This educational initiative will continue into 2024, with new themes and case studies to further enrich the collaborative effort in the fight against IP crime.
IPC policy developments
During 2023, two important legislative developments took place in the IPC area, both of which will help national authorities in the investigation of cross-border crimes.
The Digital Services Act (DSA), which came into force in February 2024, is a significant piece of legislation in the European Union aimed at regulating digital platforms and services. Key points of the DSA include increased accountability of online platforms, transparency requirements, protection of user rights, measures against illegal content, data access for researchers, risk management and independent audits, a crisis response mechanism and sanctions for non-compliance. The DSA aims to create a safer, more transparent online environment, balancing the regulation of digital services with the protection of fundamental rights. The DSA’s new obligation for online service providers to cooperate with national judicial and administrative authorities and comply with orders to provide information received directly from them will enable national authorities to obtain essential information for their investigations. Other obligations, such as the necessity to identify users and preserve advertising data, will help to discover illicit content and take appropriate action more quickly.
In March 2024, the European Parliament adopted the Artificial Intelligence (AI) Act, which is the first proposed regulation in this area, establishing uniform rules and requirements for the use of AI systems. Its key points include a risk-based approach, prohibition of certain AI practices, strict rules for high-risk AI systems, transparency obligations for certain AI systems, market surveillance and enforcement, a European AI Board, safeguards and accountability measures, and facilitation of innovation. The AI Act is part of the EU's broader strategy to harness the opportunities of AI while mitigating its risks, ensuring that AI systems are safe and respect EU laws and values. This is a significant step in establishing a comprehensive legal framework to oversee the development and use of AI systems. This will make it possible to identify the illegal use of AI and ensure that legal action is taken to address it.
Crackdown on a Lithuanian criminal network involved in large-scale food fraud and tax evasion
Crime: In 2021, an OCG purchases millions of expired food products and some other perishable goods, such as cosmetics, in Germany and France. The OCG alters the expiry dates on these products and regularly supplies them to the Lithuanian market, where they are purchased by thousands of consumers. Estimates suggest that the OCG earns over EUR 1 million through this criminal activity. The suspects keep fictitious accounting records to hide the real purchase and sale values in order to avoid paying taxes.
Action: The case is opened in January 2023 at the request of the Lithuanian authorities. A joint action day involving the concerned judicial authorities and over 200 officers on the ground takes place on 23 May. Up to 70 searches and inspections of warehouses and other locations are carried out and over 30 witnesses are interviewed in Estonia, France, Germany and Lithuania.
Result: During the action day, 24 suspects are detained in Lithuania. Equipment for altering the expiry dates on products, including household solvents, printers and labels are found at several locations in Lithuania, as well as large quantities of expired products. The OCG is successfully dismantled by the national judicial and law enforcement authorities concerned, with the support of Eurojust and Europol.
Eurojust's Role: Eurojust facilitates the communication, exchange of information and coordination between the national authorities and assists in the preparation of the joint action day. The Agency also hosts three coordination meetings and sets up a coordination centre to enable rapid cooperation between the judicial authorities involved in the operations.
Eurojust is an agency of the European Union