A copyright is created once an original work of authorship is fixed in a tangible medium of expression. Virtually all movies are therefore, copyrighted which prevents others from copying, distributing, performing, displaying, and digitally transmitting without a license.
A copyrighted movie cannot be publicly displayed without the consent of the copyright owner. However, if the movie is played privately, no violation occurs. The law defines public as a place that is open to anyone or has a substantial number of persons outside your normal social circle.
Public or Private Place
Courts often look at the nature of the establishment when determining if the showing is considered public or private. A hotel room or a private home is most likely considered a private viewing. The court will look at who is allowed in the door. In one case, a video store rented private rooms where movies could be watched. The video store said that this was a private room. However, the court decided that if anyone can pay to get in the door, then it is a public showing and copyright infringement.
Public or Private Audience
It is important to look at the size and composition of the audience in order to determine if the movie showing is private. If the group showing is invite only and involves family and friends, it is a private showing. If everyone in the neighborhood is allowed in, including people you don't know, a court would more likely consider it public.
Public Performance Rights
If a bar, club or other organization wishes to show a movie to a group, it must get permission from the copyright owner. This permission is typically obtained by getting a public performance license from the copyright owner.
Fair Use Exception
Fair use allows the use of copyrighted material in a reasonable manner without the consent of the owner. Typically, the use is considered fair if it is for commentary, criticism, education or research. Courts look at several factors when deciding if the use is fair. If the group is watching a factual movie, doesn't charge money for the viewing, and watched the movie for educational or critical analysis, a court would more likely consider the use fair. However, if just for enjoyment and there is no discussion, the court will likely find infringement of the copyright.