Copyright laws change between countries. They are designed so that nobody can be cheated out of profits from intellectual property. Definitions of intellectual property ownership and what comprises theft varies between countries. There are international Intellectual Property Agreements but these are only a rough guideline.
If you are concerned about Copyright issues the safest bet is to google the laws about it in your region. They will be different to other places.
That being said, artists guilds and industry markets or even powerful individual businesses will have their own versions of law they would like everybody to observe, but they aren't courts.
With music, generally speaking music industry businesses are more uptight about Copyright than the musicians themselves. Some musicians illegally upload their own material for free community access. It's a capitalist world, but artists aren't always capitalists.
The safest guideline is to think about profit. Are you cheating anybody out of profit by using material? For example, using artistic material which is widely available (say a Beetles song) could still get you problems if you used it in a piece of marketing like a television commercial which is designed to make you a profit. You'd probably get prosecuted by the owner of Copyright, which is probably either a wealthy eccentric or someone like Abbey Road music distribution Ltd.
Downloading a pirated version of recent material for private use could also get you prosecuted by the business distributor, arguing that you're cheating them out of profits in the regular marketplace by making the song they bought the rights to freely available to others.
But using something like an excerpt from Beethoven's symphony in a game mod is very unlikely to bring you any problems. Courts aren't really as frivolous as they seem.
It is important to note however that whatever you choose to do, it is at your own risk and ignorance of the law cannot get you exempt. So look up Copyright laws in your state or region, read them carefully and decide for yourself, or get some qualified legal advice about what you intend to do.
Whilst the law can be confusing and complicated, it is in reality operated by human beings, and there is some amount of reasoning and reasonable allowances made for specific cases. Generally speaking it is criminal intent which gets most people into trouble, that and sheer disregard. Showing all reasonable efforts to do the right thing often keeps you fairly safe legally, even if you might attract the occasional question or two.
Darth333 is a lawyer isn't she? Perhaps she can give some better advice.