Hargreaves report on intellectual property to legalise parodies and allow 'ripping' of CDs to digital devices

The government is to be urged to relax UK intellectual property laws to make it easier for people's work to be parodied, potentially paving the way for the more robust humour seen in US programmes such as The Daily Show with Jon Stewart.

Professor Ian Hargreaves' wide-ranging report on intellectual property will recommend that the government scrap strict laws on parody that often deter comedians and other content creators – including those who make videos for internet services such as YouTube – from caricaturing people's work without permission.

While US performers such as Stewart rely on the ability to parody other people's material, the Hargreaves report will argue that in the UK comedians, journalists and others have been forced to take a more conservative approach due to "fear of prosecution".

Last year's viral hit Newport State of Mind – a parody of Alicia Keys and Jay-Z's hugely successful single New York State of Mind – was forced off YouTube after the seven co-writers of the original declined to give their permission for this use of their IP.

Under the Hargreaves recommendations the parody, which writers Alex Warren and Terema Wainright unsuccessfully attempted to get clearance for in a meeting with Universal Music, would be given the green light.

"The case for introducing and updating this exception is strong in both cultural and economic terms," Hargreaves, chair of digital economy at the Cardiff School of Journalism, will say in the review. "A healthy creative economy should embrace creativity in all its aspects. A legally sound structure would not be mocked by pervasive infringement by otherwise law abiding citizens and organisations with the stature of the BBC."

Hargreaves' report, which is expected to be published on Wednesday, is also expected to recommend the establishment of a new intermediary agency that will act as a swift one-stop shop for clearing the use of copyright content.

The idea of the IP clearing house, or digital exchange – which would be run by rights holders representing sectors including the music, video game and film industries – is to make the UK "the best place in the world to do business in digital content".

This idea was raised before the publication of former Labour minister Lord Carter's Digital Britain report in 2009, and Europe has been keen and many have seen it as a way to solve the issue of "orphan works".

Organisations including the BBC and the British Film Institute have large quantities of archival content that has not been exploited by the industry because there have been issues over who some of the IP rights holders might be.

A centralised IP clearing house would allow content creators and producers to pay a fee and be protected from rights holders they are unaware of.

Another issue likely to be resolved is the copyright anomaly that makes the downloading of a CD onto an MP3 player – a commonplace practice – technically illegal. The Hargreaves report will recommend amending the rules around "format shifting", leaving the industry and government free to focus on more fundamental issues such as tackling web piracy.

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