As stated by the Motion Picture Association of America:

What is a Public Performance?
Suppose you invite a few friends over to watch a movie or a TV show that's no longer available on TV. You buy or rent a DVD or Blue-ray disc from the corner store or a digital video file from an online store and show the film or TV episode in your home that night. Have you violated copyright law by illegally "publicly performing" the movie or show? Of course not.

But suppose you took the same movie or TV episode and showed it to patrons at a club or bar that you happen to manage. In that case, you have infringed the copyright in the video work. Simply put, movies or TV shows obtained through a brick-and-mortar or online store are licensed for your private use; they are not licensed for exhibition to the public.

Why is the Creative Community Concerned About Such Performances?
The concept of "public performance" is central to copyright. If filmmakers, authors, playwrights, musicians and game designers do not retain ownership of their works, then there is little incentive for them to continue creating high-quality works in the future and there is little incentive for others to finance the creation of those works.

The Law
The Copyright Law does include a section specifically pertaining to classroom educational use in a nonprofit educational institution. A license or copyright permission is not required under the following conditions:

• The performance is in a classroom and is being used for instructional purposes in a face-to-face setting and is not broadcast, transmitted or online.
• The performance must be part of a teaching activity, although it does not need to be part of a regular course.

These rules are specified in Section 110(1) of the U.S. Copyright Act. A separate statue provides for performing a work through any transmission to students, such as through distance education or from an Educational Institution's server. That statute, which is known as the "TEACH ACT" and codified under Section 110(2) of the U.S. Copyright Act, may be used by complying with numerous requirements.

The Federal Copyright Act (Title 17 of the U.S. Code) governs how copyrighted materials, such as movies, may be used. Neither the rental nor the purchase of a copy of a copyrighted work carries with it the right to publicly exhibit the work. No additional license is required to privately view a movie or other copyrighted work with a few friends and family or in certain narrowly defined face-to-face teaching activities. However, bars, restaurants, private clubs, prisons, lodges, factories, summer camps, public libraries, daycare facilities, parks and recreation departments, churches and non-classroom use at schools and universities are all examples of situations where a public performance license must be obtained. This legal requirement applies regardless of whether an admission fee is charged, whether the institution or organization is commercial or non-profit, or whether a federal or state agency is involved.

Legal Sanctions
"Willful" infringement of these rules concerning public performances for commercial or financial gain is a federal crime carrying a maximum sentence of up to five years in jail and/or a $250,000 fine. Even inadvertent infringement is subject to substantial civil damages.