[The] American Society of Composers, Authors, and Publishers (ASCAP) has told a federal court that each time a phone rings in a public place, the phone user has violated copyright law. Therefore, ASCAP argues, phone carriers must pay additional royalties or face legal liability for contributing to what they claim is cell phone users' copyright infringement. (Source: EFF.org, via Catalogablog)
Not much of a surprise when you even have to pay royalties for singing "Happy Birthday" (or, for that matter, any copyrighted song) in a public place. As perverse as ASCAP's claim may seem at first, performing music licensed for private use in a public place is technically a copyright infringement.
In a move that can only be called "desperate", the ASCAP seems to be intent on squeezing bucks out of every opportunity as music sales keep shrinking. Here, they seem to be taking advantage of a legal gray zone. Of course whether your ringtone is legal or not depends entirely on the licence you are using it under.
One would expect (or at least hope) that any ringtone purchased as such would come with a licence that specifies that it can indeed be played everywhere, including every possible location outside your private sphere; in fact anything else constitutes something akin to fraud.
An entirely different matter is of course ringtones that you ripped from your own CDs or copied from the MP3 files on your computer. Both are explicitly licensed for private use only; using them for any kind of public performance is therefore illegal.
The point is, of course, whether a mobile phone going off in public actually constitutes a public performance, especially as hardly ever a significant portion of the song in question will be heard. It will therefore be interesting to see what kind of verdict is reached in this case. It seems to be a case of common sense vs. greed.