By: Jodi A. Konorti, Esq.
Many associations hold “movie-under-the-stars” nights. While these gatherings generally enhance the sense of community in an association, being hit with a copyright infringement lawsuit for failure to obtain a performance license can bring a quick end to the fun.
Copyright Law – Protected Work
The Federal Copyright Act (Title 17 of the U.S. Code) protects songwriters, music publishers, film producers, and the like, from unauthorized use of their copyrighted work. Federal copyright laws consider the creation and publication of music and film as “property” owned by the creator and publisher. If a work is copyrighted, the owner of the work has the exclusive right to publicly perform that work and give their permission for someone else to lawfully perform or display  the work in public. These laws directly affect community associations that play music or films in the clubhouse without obtaining a performance license before playing the work to the public in a community gathering.
What is a Public Performance?
In the performance licensing context, an association clubhouse or other common area may be considered a public place. While viewing a movie or listening to music in a private home does not require a license, to the extent a work is performed or displayed in a place “open to the public or at any place where a substantial number of persons outside the normal circle of family and its social acquaintances is gathered,” a public performance is deemed to exist (without regard to whether a fee is charged). (17 U.S.C. §101) This definition extends to performances in semi-public places such as clubs and lodges (e.g., an association clubhouse), and presumably outdoor common areas. A conservative interpretation could extend this definition to association-sponsored events even if only residents are invited.
Examples of two cases demonstrate how copyright infringement liability can arise. In one case, an association held a dance, open to the public, with an orchestra and requested a $3.00 donation. While the court did not opine on whether the clubhouse was a public place, it held an unauthorized public performance took place because the association invited the public and a fee was charged. The court’s opinion in this case indicates that if the association limited attendance to only members and did not request the donation, it may have avoided liability (liability might still have been found based on the number of guests, however).
In another case, a semi-private golf club played music in the dining room for 21 members and their guests. The court held this transmission of music was a public performance because 21 guests constituted a substantial number of persons outside a normal circle of friends. This case indicates that an association clubhouse could be deemed a public place, and even when a small number of attendees gather in the clubhouse to listen to music, a license could be required.
Exemptions to License Requirement
Even if a performance is public, an association may be exempt from the license requirement if it can meet an exemption. The most obvious exception to the license requirement is if the performance is not “public.” In addition, the law exempts the playing of radio or television stations in a public place if the association does not charge a fee to enjoy the performance (the exemption does not include playing DVDs, CDs or iPod/mp3 playlists). The law also exempts performances that are not “transmitted,” where there is no commercial advantage to the performers, organizers, or promoters, if there is also no admission charge. (17 U.S.C. §110(4)(A)) A common example of this exemption is a spontaneous sing-along at the clubhouse, but would probably not include an association-sponsored event with music playing, even without an admission charge.
Copyright Infringement Liability
Liability exists if, among other things, a work is copyrighted and the defendant publicly performed the work without first obtaining permission. The potential financial liability for copyright infringement is substantial. The Copyright Act provides for federal statutory damages of $750 – $30,000 for each inadvertent infringement, plus attorneys’ fees and costs. The damages substantially increase for intentional infringements (up to a $150,000).
Save for a few limited exceptions, the public performance of a work requires the permission of the owner through a performance license. To manage risk associated with federal copyright laws, community associations should either: (1) not allow the playing of music or movies in the common areas, or (2) obtain the necessary license from the appropriate performing rights organization (see Appendix). An association could also obtain an indemnity agreement from the performers, but this may not protect the association entirely, because joint and several liability is imposed on all parties who participate in the infringement.
As the determination of whether a license is necessary is fact-specific, we recommend you contact your legal counsel for advice.
Appendix: So, You Want to Have a Party…Now What?
If your party constitutes a public performance, the proper license(s) must be obtained from the relevant licensing entities. These entities ensure songwriters, music publishers and film producers are properly compensated when their work is played in public.
The three recognized Performing Rights Organizations (“PROs”) for music are:
- The American Society of Composers, Authors and Publishers (“ASCAP”),
- Broadcast Music, Inc. (“BMI”), and/or
- The Society of European Stage Authors and Performers (“SESAC”).
Two of the major licensing firms for movies are:
- Motion Picture Licensing Corporation, and/or
- Criterion Pictures.
- Each of these PROs maintains an expansive catalog of music and movies.
- A license from one PRO does not allow the licensee to play a work from the catalog of the other two PROs – separate licenses must be obtained from whatever PRO protects the work.
- Licensing fees are generally dependent on the number of times a work will be shown or played and the size of the audience.
- PROs actively pursue license and copyright infringement violations.
Practically, the cost to obtain a license is likely much less than the cost of the risk to the association and directors and the cost to the association to litigate an infringement action and pay-out significant damages.
Article adapted and reprinted with permission from Common Assessment Magazine, a publication of the Community Associations Institute San Diego Chapter, Summer 2013.
 “Display” is defined as “to show a copy of it, either directly or by means of a film, slide, television image, or any other device or process or, in the case of a motion picture or other audiovisual work, to show individual images non-sequentially.” (17 U.S.C. §101)
“Perform” is broadly defined as “to recite, render, play, dance, or act it, either directly or by means of any device or process or, in the case of a motion picture or other audiovisual work, to show its images in any sequence or to make the sounds accompanying it audible.” (17 U.S.C. §101)
 Public performance is further defined as transmitting or communicating a performance or display of a work to a place open to the public, or to the public by means of any device whether the public is capable of receiving the performance in the same place or separate places and at the same time or at different times. This somewhat convoluted definition means that a community with a central television channel that plays music or movies that can be viewed from individual owners’ homes may be considered a public performance. (17 U.S.C. §101)
 Hinton v. Mainlands of Tamarac 611 F.Supp.494 (S.D. Fla. 1985).
 Fermata International Melodies, Inc. v. Champions Golf Club, Inc. 712 F.Supp. 1257 (S.D. Tex. 1989).
 “Transmit” is defined as communicating a performance by any device or process where images or sounds are received beyond the place from which they are sent. (17 U.S.C. § 101(2))
 Gershwin Publishing Corp. v. Columbia Artists Management, Inc., 443 F.2d 1159, 1162 (2d Cir. 1971).