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Robert Terry Parker Mar 25, 2021 11 min read

Make Sure Your Store is Complying with Copyright Laws

NHADA member stores are often seeking ways to make visits to their automotive stores more enjoyable for their customers. Many are playing music, television, or movies in the showroom to entertain waiting customers. But, if you’re not careful, these activities can be unlawful.

Where do these laws come from?

Copyright law in the United States is governed by the Copyright Act of 1976, which provides very strict rules by which your store must abide or face substantial monetary damages. Luckily, those rules are also very clear. Here is a guide to what is legal and illegal for entertainment in your automotive store.

Can my store play movies and TV shows for customers?

Copyright law does not permit you to play movies (whether from DVDs, Blu-Rays, digital downloads, or a streaming service) for customers without obtaining a license. While you may view a movie in the comfort of your home, copyright law does not allow you to show movies publicly (i.e., to customers at a store) without obtaining a license from the copyright owner.

However, stores may play a television broadcast station licensed by the Federal Communications Commission, or by a cable system or satellite carrier, if the interior of the store is less than 2,000 gross square feet. The “gross square feet” requirement means the entire interior space of the establishment, and any adjoining outdoor space used to serve patrons, whether on a seasonal basis or otherwise. If the store is over 2,000 square feet, and most dealerships are, you can play the broadcast as long as the broadcast is not from more than four screens, with only one screen in any room, and none of the screens are larger than 55 inches along the diagonal. You also cannot use more than six speakers to play sound from the broadcast, and only four of those speakers can be in any one room or adjoining outdoor space.

Can my store play music for customers?

In general, you cannot play copyrighted music to the public (including the members of the public in your showroom) unless you have a license from the copyright owner.

However, you are allowed to play music in your store from the radio if it is from a broadcast station licensed by the Federal Communication Commission and the store is less than 2,000 gross square feet of interior space. If your store has 2,000 gross square feet or more of interior space, you can still play the radio, but you cannot use more than six speakers to do it, and only four of those speakers can be in any one room or adjoining outdoor space.

Can my store be held liable for showing video or photographs on our website?

Because it is so easy to post interesting photographs or videos on your website, it may be tempting to do so. It is illegal, however, to reproduce and publicly display copyrighted works like videos or photographs without permission. It is also illegal to distribute copies of copyrighted works to the public. Distribution of digital content occurs when a computer user views your website. In short, you should not use content on your website unless you created that content or have permission from the owner.

Can my store be held liable if an employee streams music or other copyrighted material on work computers?

Copyright law prohibits reproducing, distributing, publicly performing and publicly displaying copyrighted works of others. It is thus illegal for people to download copyrighted works from the internet, including photographs, music, movies, and computer programs because unlawful copies are being made and distributed in that process, even if not shared with customers.

But an employee watching a stream of unauthorized content, for example the TVCatchup streaming service, doesn’t technically violate these rights—unless it is a peer-to-peer streaming service like BitTorrent Live. An employee streaming from services like BitTorrent Live would get your store in legal trouble because that service relies on users storing and sharing the content or bits of the content. The result is, if you’re a viewer, you’re also reproducing and distributing the content, and that violates copyright law.

How do I obtain a license?

If you decide you want a license to play music in your store, companies offer licenses for business entities on a yearly basis. There are three main licensing companies in the United States:

If you want to show movies, the Motion Picture Licensing Corporation (MPLC) is a licensing agency authorized by motion picture copyright holders, such as studios and producers, to issue the MPLC Umbrella License® for the public performance of copyrighted motion pictures and other programs. That license lets businesses like automotive stores show movies to employees or customers publicly without charging admission or otherwise making money off the work itself.

What happens if I break the rules?

Copyright infringement can be very costly. Under the copyright statute, displaying or playing copyrighted material to the public, if the violation is committed willfully, can cost up to $150,000 for each infringed work. In addition to an award of up to $150,000 for each infringed work, courts can order the infringer to pay the attorneys’ fees and costs that the copyright holder incurs in pursuing infringing conduct. The court may (but is not required to) reduce the statutory penalty down to $200 if the court believes that the infringer had a reasonable belief that it was authorized to use the copyrighted work.

What can I do to avoid copyright violations?

  • Purchase licenses for each store for music played in the showroom or to show motion pictures in the lounge area. The cost of a yearly license is minimal compared to the possible penalties and attorneys’ fees and costs that the store could face in a copyright infringement suit.
  • Whenever you purchase digital media for the store, carefully read the limits concerning the use of the product and strictly observe them.
  • Do not copy or permit copying digital media which contain encryption or any other anti-piracy technology.
  • Do not use or copy any media that the business did not purchase without the specific permission of the copyright holder.
  • If you want to copy, distribute, or publicly display protected media, obtain permission from the Copyright Clearance Center, which serves as a central clearing house for forwarding copyright royalties to many copyright holders.
  • Train employees to understand these basic copyright rules.
  • Include a clear technology use policy either in its employee handbook, including
    • a notice to employees that they can only use the company’s information systems for company business;
    • a notice that their use of the company’s computer system will be subject to company monitoring;
    • a prohibition on the use of the company’s computer systems to transmit or receive material that is offensive, obscene, or could be construed as harassment or disparagement; and
    • a prohibition on copying, sending, or receiving copyrighted material, trade secrets, proprietary financial information, or nonpublic personal information of customers or employees (unless a part of the employee’s job function).

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Robert Terry Parker

Terry is a member of the Litigation and Business and Finance Practice Groups at Rath, Young & Pignatelli. His practice focuses on resolving commercial and intellectual property disputes. He has extensive experience litigating before state and federal trial and appellate courts and AAA arbitration tribunals in matters concerning trade secrets, unfair and deceptive trade practices, patent, trademark and copyright infringement and licensing disputes, as well as contract and employment disputes. https://www.rathlaw.com/professionals/r-terry-parker/

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