Think your Company Is in Compliance with the Copyright Act: Listen Carefully

• Date: 01 January 2019
• DOI: http://doi.org/10.1002/jcaf.22372
• Published date: 01 January 2019

Think your Company Is in

Compliance with the Copyright

Act: Listen Carefully

Dana L. Hart and Robert D. Slater

INTRODUCTION

Compliance with

laws and regulations

is one of the primary

objectives of every

model of corporate

governance. A dra-

matic rise in the

number of chief com-

pliance officers

(CCO) in organiza-

tions, confirms that

companies realize the

value of compliance

(Lorde Martine, 2015). The

cost of violating laws and regu-

lations often goes beyond just

legal penalties. The adverse

publicity generated by coverage

of a compliance issue may

erode a firm’s stock price

(Rezee, Espahbodi,

Espahbodi, & Espahbodi,

2012). In many cases, this loss

of market capitalization is

larger than the legal fines. For

some investors, violations of

laws and regulations may be

signs of a weak internal control

structure. CCO and chief audit

executives (CAE) should work

together to develop a compre-

hensive strategy to create and

monitor a company’s compli-

ance strategy.

One often overlooked com-

pliance issue for businesses is a

provision of the Copyright Act

dealing with the performance

of copyrighted works. Any

company that has music or

televisions playing in areas

where customers shop, eat,

drink, dance, or otherwise

congregate should

probably brush up on

their understanding

of “performance”

under the Copyright

Act of 1976 (2012)

before one or all of

theactivePerformance

Rights Organizations

(PROs) sues the

business for copyright

infringement.

Managers or owners

may not always under-

stand what is “aper-

formance”of copyrighted work.

While some businesses assume

their company’s practices are

exempted by either the home-

style exemption (§110[5]) or the

Fairness in Music Licensing Act

(1998), this is often an incorrect

assumption. Most companies

avoid fines under the Copyright

Actbypurchasingacommercial

music subscription. However, all

companies, even ones with com-

mercial music subscriptions,

should train and monitor

employee compliance with

Companies who use music or video to entertain

customers need to maintain compliance with the

“performance”provisions of the Copyright Act.

Many businesses assume they are automatically

exempt from paying royalties under the Copyright

Act’s Homestyle Exemption or the Fairness in

Music Licensing Act of, 1998. Companies are

often surprised to find they owe royalties to

Performance Rights Organizations. This article

discusses the Copyright Act and the compliance

issues associated with playing copyrighted works

within a business. © 2019 Wiley Periodicals, Inc.

© 2019 Wiley Periodicals, Inc.

Published online in Wiley Online Library (wileyonlinelibrary.com).

DOI 10.1002/jcaf.22372 171