Are you playing by the pay-per-view rules?

Bob Miller

With the increased popularity of pay-per-view mixed martial arts (MMA) and similar events, restaurant and bar owners are under growing pressure to provide this type of televised programming. But many bars and restaurants are doing so without permission, and the result is often legal action and big fines. According to a national analysis of federal lawsuits, in 2009, 660 suits against businesses were filed by pay-per-view providers nationwide. By 2011, the number had climbed to 1,612 cases.

It’s important for foodservice operators to recognize that they need to obtain express written permission from MMA and other pay-per-view program owners before showing these programs. Equally important is that you fully comply with any rights you are granted to make sure no further action is taken.

As these program owners have been and will continue to be very vigilant in enforcing their rights, failure to obtain and comply with such granting of rights could result in court-issued injunctions against showing the program, costly litigation and hefty damages.

The following example illustrates the problem: In January 2011, Joe Hand Promotions—a distributor of closed circuit pay-per-view boxing, MMA matches and special events—sought $150,000 in damages in a federal court from Steamers Seafood Bar & Grill in Bethesda, MD. In its complaint, Joe Hand claimed that Steamers Seafood did not have the requisite consent to televise an Ultimate Fighting Championship event. The judge found in Joe Hand’s favor, ordering the restaurant to pay $26,500 in damages. That figure does not include the restaurant’s costs of mounting a legal defense against Joe Hand.

As the pay-per-view industry puts its foot down against unauthorized public broadcasts, similar cases (with similar results) have become commonplace against bars, restaurants and other establishment owners across the country.

To avoid getting caught up in a legal battle, take the following steps:

• Avoid showing any programming without proper authorization.

• When presented with the opportunity to show programming, make sure you request backup documentation authorizing its display. If such documentation is not made available, refuse to show the program. If documentation is made available, review (or have your lawyer review) the paperwork to make sure that it provides you with all necessary rights to show the desired programs.

• Make sure that you understand all the terms and conditions in the contract for showing the program. These contracts typically include several provisions that could directly affect your bottom line. Such contractual provisions of interest include how much you have to pay the program owner for the right to show the event, when and how often you can show the event, whether you can record the event for repeated showings and how you can promote showing the event. Once you have signed the contract for these rights, you must comply with the requirements therein or face legal action for contract breach.

If, for some reason, you find yourself at the wrong end of legal action by a pay-per-view program owner, make sure you:

• Immediately stop any showing and related promotion of the programming at issue.

• Consult with a lawyer about how to respond to the program owner.

• At a minimum, let the program owner know that you have stopped showing and promoting the programming.

Bob Miller is a partner at the Texas-based law firm Gardere Wynne Sewell LLP, where his practice focuses on telecommunications law. He can be reached at [email protected].