Most lodging operators are at a loss when they are contacted by one of the performing rights societies�the American Society for Composers, Authors and Publishers (ASCAP), Broadcast Music, Inc. (BMI), or the Society of European Stage Authors and Composers, Inc. (SESAC) � and told that they have to pay for the use of copyrighted music in their establishments. The possibility of a copyright infringement, if any, arises where the copyrighted music is publicly performed without permission of the copyright owner, regardless of whether the music is performed by live musicians in the establishment, by wired music, by record player or tape recorder, or by other mechanical means.

An infringing user may be sued in federal court and subjected to substantial liability in terms of statutory damages, which may be far greater than the license fees would have been.

Commonly Encountered Copyright Issues in Hotels

Jukeboxes: The current jukebox licensing system is based on voluntary negotiations. Under these [statutory] provisions, copyright owners of non-dramatic musical works and operators of coin-operated phonorecord players are authorized to negotiate and agree on the terms, rates and distributions of the royalty payments for performances of these works.

Private Parties: A question which persists under the copyright law is whether an innkeeper may be held liable for a copyright infringement by a person or entity which rents a private dining room, banquet room, or ballroom in the hotel and provides its own music. Because the hotel receives F&B revenues from the party and therefore "benefits from the infringing activity" the law indicates that in certain instances the innkeeper could well be liable to the copyright owner for any such infringement.

Rebroadcasts: The interception of radio or television communications can result in violations of the copyright laws. Thus, where an innkeeper intercepts scrambled radio or television signals, decodes them, and retransmits the broadcast to guestrooms, the innkeeper is probably violating both of the above-cited acts. This can result not only in liability for damages, but also in criminal sanctions.

However, a secondary transmission of a primary transmission embodying a performance display is not an infringement under the Copyright Act of 1976 if the secondary transmission is not made by a cable system and consists entirely of the relaying by the innkeeper of signals transmitted by a broadcast station licensed by the Federal Communications Commission, within the local service area of the station, to the "private lodgings of guests" in a hotel, and no direct charge is made to see or hear the secondary transmission. This exemption is limited to a simply relay of the transmission, and the retransmitter [hotel] cannot adapt or change the signal in any way, such as by cutting out advertisements or running new commercials.

Moreover, the term 'private lodgings' is limited to private rooms or rooms used for private parties, and does not include dining rooms, meeting halls, or any places that are outside of a normal circle of a family and its social acquaintances. Finally, ... placing an ordinary radio or television set in a private hotel room does not constitute [a copyright] infringement."

The Aiken Exemption: The Copyright Act of 1976 made the playing of a radio or television before any public group a "public performance" and, therefore, an infringement if it was done without the copyright owner's consent. But Section 110(5) of the 1976 act, which embodies what is known as the Aiken exemption:
exempts from copyright liability works performed by the use of standard radio and television sets in small commercial establishments when the works are played for the enjoyment of customers. The rationale behind this exemption is that retransmitted public performances of this type are a de minimis invasion of the copyright owner's interest. The exemption is a limited one; it applies to transmissions only, excluding performances of recorded music or a videotape in a small commercial establishment.
Thus, the local bar that plays a record on the phonograph or a videotape of a movie on the television is not covered by the exemption. Moreover, there can be no admission charge to listen to the performance. Liability would be imposed where the proprietor of the establishment has installed a commercial sound system, or has converted a standard receiving apparatus into the equivalent of a commercial system.

The "Fairness in Music Licensing Act," enacted in 1998, exempts small restaurants and bars from paying royalties for playing copyrighted music during business hours. This act exempts restaurants/bars with 3,750 square feet or less from having to pay royalty fees for music played over radios or TV sets. In addition, other retailers occupying less than 2,000 square feet, and any business with fewer than seven speakers or four TVs, are exempt. But royalty fees are still required for businesses playing live music, prerecorded tapes, or music from jukeboxes.

Movies Provided by Innkeepers in Guest Rooms

A. Movies Provided by Third Parties: If the innkeeper contracts for the services of a company to provide in-room movies which the hotel's guests can watch, a California case held that the in-room movie service (On Command in that case) was "transmitting" the movies to the public and that it thereby infringed on the copyrights of the movie producers. The case did not discuss whether the innkeeper could also be held liable in that factual setting, but, obviously, innkeepers need to be sure that the in-room movie companies with which they contract agree to protect the innkeeper against any claims by the movie producers.

There is also a concern that this type of in-room movie service could also create liability to the performing rights societies (ASCAP, BMI, SESAC). In some cases, the in-room movie services pay the performing rights societies for whatever licenses are needed for the movies they provide to hotels, but apparently that is not always the case. Therefore, the author advises innkeepers to review carefully any contracts which they might consider entering into with an entity that wishes to provide in-room movies for their guests. Among other things, it is very important that the contract clearly state that the company providing the movies, and not the innkeeper, is solely responsible for complying with all applicable copyright and similar laws and for the payment of any and all fees owing by virtue of those laws. The contracts should also provide that the entity will indemnify the innkeeper in the event that any liability is asserted against the hotel. Additionally, it is important that these contracts be drafted so as not to expose the innkeeper to any sales tax liability with respect to the in-room movies.

B. Rental of Movies by Innkeeper: What about a situation in which the innkeeper rents to his/her guests videotape or videodisc movies for the guests to view in their guestrooms? The case of Columbia Pictures Industries, Inc. v. Professional Real Estate Investors, Inc., (9th Cir. 1989) 866 F.2d 278, says that such activity is not an infringement. Briefly stated, this suit involves a claim by several movie producers against an innkeeper on the grounds that the innkeeper violated the movie producers' copyright interests in various movies by renting to its guests videodiscs of the movies for the guests to view on in-room videodisc players. The innkeeper in question bought the videodiscs from RCA Corporation and paid the appropriate price for them. The innkeeper then installed videodisc players in each guestroom, and the guests could rent the videodiscs to view in their guestrooms. The court noted that the innkeeper did not place any of the videodisc players in any common areas of the property (such as the lobby or the restaurant), and that there was no indication that the innkeeper ever showed the movies in any of the property's common areas.

The court stated that a hotel room is like a home in that the guest has a right of privacy and the right to have the peaceful enjoyment of the guestroom, and, therefore, the innkeeper had not violated the plaintiffs' copyright interests in the movies.
Copyright Issues Involving Exhibitors, Associations: When an association or other group holds a meeting in a hotel and music is involved in the event, the question arises as to who is liable for the copyright fees owing in connection with the event � the hotel? The host group? Exhibitors who use music in their booths? Innkeepers who have signed a master license agreement (see above) need to bear in mind that those agreements do not cover music involved in meetings, conventions, trade shows, and similar events.

Therefore, the meeting planner and its client need to be aware that they, and not the hotel, will be liable for any such fees. Of course, this is an item which can be negotiated between the hotel and the meeting planner, but, again, innkeepers should be aware that their master license agreement does not cover music provided by the patron at such events.
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Our thanks go to Jim Abrams, President and CEO of the California Hotel & Lodging Association (CH&LA) for his invaluable insights about copyright laws.   The article is excerpted from Laws Pertaining to the California Innkeeper (3rd rev. ed., 2002) which is written by Mr. Abrams and published by the California Hotel & Lodging Association.  To get more information about this publication and other resources available from the California Hotel & Lodging Association, go to www.calodging.com. Contact Jim at the CH&LA offices at 1.800.678.2462 or [email protected].

The information presented in this newsletter is intended as general information and may not be relied upon as legal advice, which can only be given by a lawyer based upon all the relevant facts and circumstances of each particular situation.

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