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May 29, 2017

CT bars, restaurants face lawsuits over fight-night broadcasts

photo | Andrey_Popov, shutterstock.com
Stephen O. Clancy, attorney, Robinson + Cole
By Matt Pilon

A litigious California company is attempting to squeeze more than $1.3 million from Connecticut restaurants and bars for allegedly showing professional boxing matches without a proper license.

Since April, J & J Productions, which owns closed-circuit TV and pay-per-view distribution rights to professional boxing broadcasts, has sued eight Connecticut eateries and watering holes in federal court, including several in Greater Hartford, as part of a nationwide crackdown against businesses that display fights without paying the required commercial sublicensing fee.

Most of the Connecticut suits demand $170,000 in damages, plus attorneys' fees.

A commercial sublicense often costs much more than ordering a fight at home, and federal law allows for sizable financial penalties against businesses found to have willfully displayed an illegal broadcast for commercial gain — such as bringing in more customers, sometimes for a cover charge.

J & J has filed more than 3,000 lawsuits in federal courts across the country since 2007, legal records show.

Connecticut businesses named in the recent spate of suits include Cloud Coffee & Martini Lounge, Lala's La Mirage Cafe and Mi Imperio Bar & Grill, all in Hartford, as well as Savores Restaurant in Wallingford.

The latter three establishments did not return messages seeking comment for this story, while Cloud, located on Congress Street, appears to have closed. Its owner could not be reached.

Three of the four area bars are alleged to have shown a May 3, 2014 welterweight championship bout between Floyd Mayweather and Marcos Rene Maidana, while Mi Imperio is alleged to have shown a June 7, 2014 middleweight championship fight between Miguel Cotto and Sergio Martinez.

Attorneys familiar with J & J and cable piracy laws say the suits often follow several demand letters asking for money for an unauthorized broadcast and can be difficult to defend. Many businesses settle for undisclosed amounts, often without ever entering an attorney into the court record.

“It's rare that anyone gets out of a TV signal piracy lawsuit without shelling out some amount of money to resolve it, unfortunately,” said Shawn Cohen, a partner at New York law firm Charles Pascal Cohen, which counts television piracy defense among its niches.

For those subpoenaed to appear in court, it's rarely difficult for J & J to prove its allegations. Similar to the tactics of music rights' owners, J & J — which has filed nearly 50 suits in Connecticut federal court since 2007 — has been known to send plain-clothed representatives to bars and restaurants on the night of pay-per-view matches. Later, they file affidavits in court attesting to what they witnessed.

“It potentially puts [lawsuit targets] in a tough spot,” said Stephen O. Clancy, an attorney at Robinson + Cole who defended a Hartford bar against J & J in 2008. “To be successful, you just have to show that the establishment showed the fight and wasn't one of your sublicensees.”

While any lawsuit target can choose to fight allegations in court, the potential stakes are high.

“You're certainly facing some stiff statutory penalties if you're unsuccessful,” Clancy said.

In addition, Clancy said federal law also allows for the recovery of attorneys' fees and other costs.

“There's not a lot of risk on the part of the plaintiffs to bring these lawsuits,” he said. “It can almost become a revenue stream, in addition to an enforcement procedure.”

J & J did not respond to a request for comment for this story.

While J & J often demands six-figure penalties, court records show the company doesn't always get the full amount it wants. Of the nearly 50 suits filed in Connecticut since Feb. 2007, the majority have settled for undisclosed amounts or were dismissed, court records show.

Of the several area judgements that have been made public, the largest was for $27,900 in 2009 against a Waterbury bar. The smallest judgement was $4,800 against a Bridgeport market.

Clancy said he understands J & J is trying to protect its distribution rights and those of its sublicensees who pay full price. Boxing and its pay-per-view model have also been facing new challenges, such as illicit internet streams, that have eaten into revenues.

But even smaller settlements and judgements could be enough to put a business out of operation. Standard commercial insurance policies are unlikely to cover such lawsuit penalties, Clancy said.

Confusion, errors

Cohen said he has seen instances in which bar or restaurant owners paid for a fight through their cable provider, but didn't realize their subscription was registered as a residential account.

Others simply may not have realized commercial use has a far different and higher-stakes set of rules than simply viewing at home.

”Businesses are at a huge disadvantage, especially small businesses,” he said.

Some establishments might even think a legal demand letter seeking money for an unauthorized broadcast is a scam and throw it in the trash, he added.

However, ignorance isn't a good defense.

“There is no mental component or 'I made a mistake' component,” Cohen said. “It's 'did you show it in a businesses establishment or not?' ”

Cohen said cable service providers should do a better job educating business customers and ensuring they don't inadvertently break piracy laws.

Both Cohen and Clancy agree that businesses with television screens should do their homework.

“Make sure you have gone through the process properly,” Clancy said. “You certainly don't want to end up in a situation two years down the road facing one of these lawsuits.”

Music lawsuits

Broadcasting rights may be a minefield for small businesses. But it's not just about what's displayed on flatscreens. What comes through the speakers can be costly too.

Over the years, many Connecticut businesses have been sued by entities that own the rights to recorded music, including Broadcast Music International (BMI) and The American Society of Composers, Authors and Publishers.

Many suits are ongoing, including a May 16 BMI suit against a Wallingford bowling alley.

The federal laws governing broadcasts and recorded music are different, but the legal strategy is similar. Plain-clothed representatives visit establishments without commercial rights licenses to snoop for potential violations, and demand letters often precede lawsuits. Finally, most settle for undisclosed amounts.

One notable recent suit involved Wallingford-based Brothers Restaurant. Last March, BMI won a $35,000 default judgement against the 33-year-old eatery, which closed earlier this year.

A 2014 BMI suit against Bristol's Bleachers Sports Bar & Restaurant settled early last year for $16,000, according to court records.

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