Here is an excellent article on the most common myths people have about what constitutes fair use. I myself have seen several of these, particularly the one concerning content on the internet, and the belief amongst non-profits that anything they do constitutes fair use because of their non-profit status.
I think a big issue is that many people attribute a lay person’s definition to a term that has a precise legal meaning. For example, one of the most common misconceptions involve the word “public domain”. This term has a specific legal meaning–that a particular work’s term of copyright protection has expired and anyone can now use it without permission. Most people seem to understand this concept. The confusion comes in when things are posted to the internet…they are posted to the domain of the public. There are many who think that by posting something online, the author has put something in the public domain and that anyone can now use it. Domain of the public-yes…public domain-no.
Another common misperception is that it is fair use as long as the person using the material is not making a profit. This is where many non-profits get themselves into trouble. I’ve also seen that argument used by the general public-no profit means no infringement. The Copyright Act does not include a profit motive in it’s definition of infringement. Infringement is merely unauthorized use of copyrighted material. Whether the person made a profit does not matter in an infringement claim. (But it might come into play when determining damages!) Further, the question of whether an infringer made a profit is merely one factor in the balancing act of the fair use analysis, but it is not a determinative factor. A defense of fair use can fail even if the infringer never made a nickel.
When trying to determine if your use will fall under a fair use defense, it is important to examine the facts of your use under the four factors under the Copyright Act, and not the “urban rumors” of the internet.