According to Copyright Law 17 USC (chapter 1) Section 110 (1)

http://www.copyright.gov/title17/92chap1.html#110

110. Limitations on exclusive rights: Exemption of certain performances and displays41

Notwithstanding the provisions of section 106, the following are not infringements of copyright:

(1) performance or display of a work by instructors or pupils in the course of face-to-face teaching activities of a nonprofit educational institution, in a classroom or similar place devoted to instruction, unless, in the case of a motion picture or other audiovisual work, the performance, or the display of individual images, is given by means of a copy that was not lawfully made under this title, and that the person responsible for the performance knew or had reason to believe was not lawfully made;

The American Library Association interprets this to mean the following:

2. Classroom Use of Videotapes

Classroom use of a copyrighted video is permissible only when all of the following conditions are met:

  • The performance must be by instructors or by pupils.
  • The performance is in connection with face-to-face teaching activities.
  • The entire audience is involved in the teaching activity.
  • The entire audience is in the same room or same general area.
  • The teaching activities are conducted by a non-profit education institution.
  • The performance takes place in a classroom or similar place devoted to instruction.
  • The person responsible for the performance has no reason to believe that the videotape was unlawfully made.

Copyright for Libraries:  Videos and Movies, by the American Library Association.