I was looking into this for someone else, and as it's quite interesting I'm also posting it here. Most of the information comes from the Australian Copyright Council website. I didn't go into music or digital copyright because the original task related to using text on quilts, embroideries and in art work, but music would be similar. It's important to understand what we can use legally but in the end it is a moral issue and we must monitor ourselves.
In Australia, copyright protection is free and automatic; there is no registration system but this does not mean it doesn't exist. The Australian Copyright Council website has all the information available if you need more detail - http://www.copyright.org.au/
Copyright is a legal protection for material including writing/poetry, visual images/logos, music/lyrics and more. Copyright protection gives the copyright owner the right to control the use of their material including reproduction and electronic communication - anyone who uses their material without permission will infringe copyright. An infringement means the copyright owner could bring an action against the person who infringes their copyright to recover damages.
In most cases, copyright lasts from the time the material is created until 70 years after the end of the year the creator dies. During that time the copyright can be inherited by the creator's family or friends, or included in the assets of a business.
You need permission to quote from a work if the quote forms a "substantial" part of the source work. A part will generally be "substantial" if it is an important, distinctive or recognisable part. The quality of the part is more important than the quantity or proportion. The purpose of the use may be relevant; if you are using it for a commercial purpose you will need permission and possibly will have to pay for the right. There is no provision in the Copyright Act that allows you to use copyright material after you have tried, but failed, to find the copyright owner if it is still under copyright protection.
There is no special exception which allows you to use copyright material without permission for educational purposes or for a non-profit purpose - you still need to get the permission. And, just because certain information, poetry, lyrics etc is available on the internet does not necessarily mean it is free to use.
A work is in the "public domain" if its copyright protection has expired. There is no list of works that are in the public domain so you'll have to find out who the author was, when the author died and whether the work was first published during the author’s lifetime. Once copyright on a work has expired, it cannot be revived by subsequent publication ... an example is the works of William Shakespeare - anyone can reproduce all or parts of his work. A publisher who produces Shakespeare's work will only own copyright to the typographical arrangement and can prevent another publisher making an exact copy of that publication, but not of Shakespeare's work.
"Moral rights" are rights relating to a creator’s reputation in connection with their work - in addition to the "economic rights" - like the right to reproduce the work. Creators are entitled to take legal action if they are not credited for their work; if their work is falsely attributed to someone else; or if their work is treated in a derogatory way – for example, by distorting it or modifying it.
If you are requesting permission to use copyright material you should provide the copyright holder with as much detail as possible, such as: title and author (ISBN if possible) of the publication from which you want to take the material; a description of the material you want to use, number of words or line count; the format of publication as well as your details.
Most sport teams would not allow people to use their logo for commercial purposes. In charity situations, they may still control the use very closely so you'll need to inquire about the legal use.
But if you are buying fabric that has a logo printed on it then the legal use has been sorted out. This also applies to licensed cartoon characters, other commercial images and creative writing on fabric. Someone else has obtained the permission.
It is risky to use creative work without permission unless you are absolutely certain that the work is in the public domain. There was a case in the US of a lady who had written a short poem in 1989 titled 'Families are like quilts'. She developed this and sold as a stitchery/embroidery pattern, copyrighted in 2005. Later she found her poem was being sold on decorative wall hangings and embroidered pillows. She claimed these were unauthorised copies and filed a lawsuit against 6 companies. I think it's still with the courts.
So, it seems that if it is already printed on fabric bought by the metre, that's alright, but if you appliqué, embroider, knit or paint it on you need permission.
Please keep in mind that creative material has been written, designed or put together by someone and they deserve recognition for their work and control over how it is used.