Pirates are just robbers. Bands of brigands with big, expensive ships, shiny cutlasses and amusing shoulder-parrots. They attack commercial shipping. Mostly because they want to separate the commerce from the shipping, so they can bury it on desert islands for no reason. They also steal ships and hold crew members to ransom. Occasionally they do a bit of smuggling, or perhaps raid a few coastal settlements. What they don't do is send out a fleet of warships to contest the seas with the crown. That's what navies do, not pirates. If the crown comes along, the pirates don't sit around in battle and hope to survive their inevitable destruction, they run and hide until the crown goes home again.
Hence, in EUIV, pirates shouldn't be represented by random rogue naval fleets, but by some nice and well-illustrated modifiers. Not little bits of text or some random events, but an actual interface element and a mapmode. Pirates were quite important at that time, you know?