Movies and Music
QUESTION: We play music in our clubhouse and have a weekly movie night. One member said we must pay a license fee because everything is copyrighted. Is that true?
ANSWER: It depends. Congress allowed limited exemptions to the licensing rule that some clubhouse music may fall into (such as playing a radio or television in a public place if the association does not charge a fee to watch or listen to the performance). Following are some of the guidelines for deciding whether you qualify.
Intellectual Property. Music and movies are the intellectual property of those who create and copyright them. If you authorize the "performance" of their work, you must pay a fee. This applies to radio and TV stations, restaurants, department stores, etc. It also applies to community associations that put on "public" (17 U.S.C., § 101(1)) performances of music and movies in their clubhouses.
Clubhouse Considered Public. A clubhouse is considered a public forum within the development. (Fermata Int'l Melodies, Inc. v. Champions Golf Club, Inc., 712 F.Supp. 1257 (S.D. Tex.1989); Damon v. Ocean Hills.) One condominium association was found in violation when it played copyrighted songs for a dance held in its clubhouse, where it did not charge a fee to attend but asked for a donation, which the court deemed an admission fee. (Hinton v. Mainlands of Tamarac, 611 F.Supp. 494 (S.D. Fla. 1985).)
Clubhouse Movie Night. Unless license fees are paid, clubhouse movie nights for members violate copyright laws. The Motion Picture Licensing Corporation posted the following on its website:
- Motion pictures and other audiovisual works available for rental or purchase are intended for personal, private, and home use only. If you wish to show the work in any other place, you must have a separate license that specifically authorizes the public performance of that work. These rules are detailed in the federal Copyright Act, as amended, Title 17 of the United States Code.
- According to The Copyright Act, only the copyright owner holds the exclusive right, among others, “to perform the copyrighted work publicly.” (Section 106)
- The rental or purchase of a motion picture or other audiovisual work does not include the right to perform the copyrighted work publicly. (Section 202)
- Films may be shown without a separate license in the home to a normal circle of family and its social acquaintances (Section 101) because such showings are not considered public.
- Films may be shown without a license to non-profit educational institutions for “face-to-face teaching activities” because the law provides a limited exception for such showings. (Section 110(1))
- All other public performances of motion pictures and other audiovisual works are illegal unless authorized by license. Even performances in semi-public places such as clubs, lodges, factories, summer camps, and schools are public performances subject to copyright control. (Senate Report No. 94-473, page 60; House Report No. 94-1476, page 64).
- Both for-profit organizations and non-profit institutions must secure a license to show films, regardless of whether an admission fee is charged. (Senate Report No. 94-473, page 59; House Report No.94-1476, page 62)
Licensing. Associations can purchase annual licenses for music from ASCAP (American Society of Composers, Authors and Publishers), BMI (Broadcast Music Inc.), UMG (Universal Music Group), RIAA (Recording Industry Association of America), and SESAC (Society of European Stage Authors and Composers). A license from any of the above organizations only applies to copyrighted material in that organization's collection. Accordingly, it may be necessary for an HOA to obtain licenses from more than one organization. For movies, the licensing organizations are MPLC (Motion Picture Licensing Corporation) and Criterion Pictures.
Penalties. Unintentional violation of copyright laws can result in statutory damages ranging from $750 to $30,000 per violation, plus attorneys' fees and costs. Intentional violations can result in damages up to $150,000 per violation, plus attorneys' fees and costs.
Internet Wi-Fi
QUESTION: Can a board add Wi-Fi to the clubhouse and charge homeowners for the monthly fees without a vote of the owners?
ANSWER: Depending on the cost, yes. Wi-Fi stands for "Wireless Fidelity." It is a user-friendly term for "IEEE 802.11b direct sequence," the specifications for establishing wireless local area networks. People have become so dependent on the internet that coffee shops offer it for free to lure people into their stores. So, it's no surprise that associations now install Wi-Fi in their clubhouses. Unless the governing documents state otherwise, boards can provide Wi-Fi service if funding does not exceed a 5% special assessment or increase dues by more than 20 percent. If members believe Wi-Fi to be a waste of money, they should make their feelings known to the board. They can also run for the board on a platform of pulling the plug on Wi-Fi.
Precautions. If the association installs an "open" or unsecured Wi-Fi system, there are risks. First, anyone can piggyback onto the wireless signal to commit crimes. A hacker can access other users' passwords, bank accounts, emails, etc. Or they can use it to download child porn (which will bring federal agents knocking).
If an association intends to set up Wi-Fi in the clubhouse, it should be careful to set up a secure network with appropriate firewalls and use restrictions. For more information, read security tips from the U.S. government's "Computer Emergency Readiness Team" on wireless technology. The association should also add a disclaimer and a "terms of use" page to the sign-in process where users agree to hold the association harmless.
ASSISTANCE: Associations needing legal assistance can contact us. To stay current with community association issues, subscribe to the Davis-Stirling Newsletter.