The Beat Doesn’t Go On as Lawsuits Hit Hospitality Industry for Copyright Infringement
Walk into any hotel lobby, restaurant, or bar with music playing. Even when the music is background noise, it’s integral to the establishment’s ambiance and elevating the guest experience. Yet without proper licensing, establishments are taking a big risk of being hit with a copyright infringement lawsuit. Hotels, bars, and restaurants around the country are waking up to suits from licensing giants, record labels, and The American Society of Composers, Authors and Publishers (ASCAP). Moreover, social media and today’s digital age are making identifying who is violating the Copyright Act easier.
The U.S. Copyright Act
According to the United States Copyright Act, the public playing of copyrighted music at commercial places such as hotels, restaurants, and bars requires licensing. Public performance is defined as playing music in any place where a large number of people outside of one’s immediate family and friends may hear it, such as public venues. This involves playing music through speakers, live performances, and even TV or radio broadcasts with music.
Performance rights organizations (PROs) represent songwriters, composers, and publishers and handle the majority of music licensing for public performances in the United States. ASCAP, BMI (Broadcast Music, Inc.), SESAC (Society of European Stage Authors and Composers), and GMR (Global Music Rights) are the major performing rights organizations in the United States. These organizations grant blanket licenses, which allow companies to play music from the PROs’ catalog of songs. Each PRO represents a separate music catalog, so businesses often require licenses from many PROs to cover the range of music they want to play.
Venues must still obtain licenses from the relevant PROs for live music performances, as these performances also constitute public performances under copyright law. The venue is responsible for obtaining the licenses even if the performers play cover songs.
Many businesses can also use subscription services like Muzak or Spotify for Business, which offer music streams licensed for public performance.
Without a license, an establishment can be subject to severe penalties. Penalties can vary from $750 to $30,000 per song in statutory damages and up to $150,000 per song if a jury determines the copyright infringement was “willful,” plus attorney fees.
In addition to statutory damages, businesses may also be liable for any actual damages suffered by the copyright holder due to the infringement and any profits attributable to the licensing infringement that weren’t already taken into account under the statutory damages.
Sour Notes: Lawsuits Filed Against Hotels
Sony Music Entertainment (SME) filed a lawsuit against Marriot International, alleging the hotelier of “willful” copyright infringement in social media posts like TikTok and Instagram. The lawsuit includes 931 infringements of SME’s recordings, of which 913 were in social media posts by the Marriott-owned, managed, or franchised hotels. Works include artists like Beyonce, Harry Styles, Britney Spears, Miley Cyrus, and others. According to an article on Music Business Worldwide, the number of infringements could expose Marriott to statutory damages of up to $140 million. The lawsuit claims that Marriott was first made aware of the infringement in 2020 and received numerous notices, including earlier this year in March.
ASCAP filed 13 separate copyright infringement actions against bars and restaurants across the country in March. In a press release, ASCAP Chairman of the Board and President, songwriter Paul Williams, said, “We want every business that uses music to prosper, including bars and restaurants. As songwriters and composers, we must earn our livelihoods through our creative work, and music is how we put food on the table and send our kids to school. Most businesses know that an ASCAP license allows them to offer music legally, efficiently, and reasonably priced while compensating music creators fairly.”
Identifying Violators of Copyright Act
These lawsuits are nothing new but are gaining front-and-center traction, as it’s now easier to identify establishments violating the law. Technology, including social media, algorithms, and AI, has increased PROs’ ability to detect copyright infringement. Social media gives visibility, algorithms automate the scanning of internet content, and AI-powered solutions provide real-time monitoring of music usage, making it much easier for PROs to detect unlawful music performances in hotels, restaurants, and bars.
General Liability, Umbrella Insurance Doesn’t Apply to Copyright Infringement
At Distinguished Programs, we stress the need to discuss this exposure with your clients and reiterate that they will not be protected in a lawsuit. Commercial General Liability policies typically have specific exclusions for intellectual property violations, including copyright, trademark, and patent infringement, and the Umbrella policy follows suit.
About Distinguished Programs
Distinguished Programs is a leading national insurance Program Manager providing specialized insurance programs to brokers and agents with specific expertise in Fine Art and Collectibles, Environmental and Construction Professional, Executive Lines, Inland Marine, Real Estate, Community Associations, Surety, Hotels, and Restaurants. Property and Liability products are distributed through a national network of agents and brokers. Serving the same core markets and partnering with the most stable and reputable carriers, Distinguished’s high-limit Umbrella programs remain the clear choice in its area of specialty for superior coverage, competitive pricing, and attentive service. Through thoughtful innovation, stemming back to 1995, Distinguished Programs fosters growth and opportunities for its brokers, carriers, and employees.
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