Alan Chadsey didn't realize what he was onto when he began taping "General Hospital" on his Betamax and showing it at the Pierce Street Annex. By his own admission, it was a plot to attract customers. He recorded the Emmy-winning soap opera every day at 3 p.m., then played it during cocktail hour for customers. Encouraged by the good response, he began showing five hours of the daytime drama on Sundays, so that customers who work could catch up on a week's worth in one afternoon.

The gimmick worked. Women flocked to the bar on Sundays to get their fix on the soap, and the men -- the men herded into the place to watch the women watching the tube. Soon the lounge on 19th Street was tuning in to doctors and nurses and patients and passion every week. And customers. "It turned into a social event," Chadsey said. "We had a great time." He put out free food, began organizing barbeques and hiring bands to play Sunday evenings after the show was over. The Annex and its "General Hospital" marathon became a Sunday institution.

The fun at Pierce Street Annex became so well-known that ABC learned about it.

ABC attorney Patricia Murphy called the Annex about 10 days ago and began speaking in legalese. "Infringement of our copyright." "Causing ABC irreparable damages." Cease and desist." "Appropriate equitable and legal remedies." Martin Davis, one of the bar's owners, told Murphy he wanted it in writing.

They got the message, Chadsey, Davis and their partner, Jim Curran, immediately sent off this letter to Murphy: "Acting upon the advice of the law firm of SQUEEZEM, SQUEEZEM, and MAKEMPAY, our legal counsel, please be advised of the following: "We surrender.' Yours truly."

"David and Goliath, huh?" Chadsey said, when asked if they ever considered bringing the matter to court. "I didn't think we could beat the system."

ABC's attorney Murphy, who called the Annex incident "a clear issue," said the "General Hospital" phenomenon is unique, although a similar situation happened earlier this year with a discotheque in Quincy, Mass., in which ABC had to get a federal court injunction to stop its owners from featuring the serial.

ABC's concern with the Annex is part of the entertainment industry's larger concern with the new video technology. The matter is of such concern that in 1976 Universal Studios and Walt Disney Productions went to court in an effort to stop Sony Corp. from producing Betamax video recording machines. Sony won that case when a federal judge ruled in 1979 that noncommercial use of the machines does not violate copyright laws. But Universal and Disney have appealed, and a ruling has yet to be made.

The threat of a lawsuit by ABC was enough to make the Annex owners put away their Betamaxes and take a long station break on Sunday afternoons.

"Everyone who came had something in common," Chadsey said. "As opposed to the traditional Sunday brunch, we got all these people -- especially women who work -- to come down . . . We had a great time."

He got the idea of showing the soap about one year ago when a friend told him how popular "General Hospital" was in her office. Four women would take their coffee breaks consecutively, the friend said, so they could each watch one quarter of the hour-long daytime drama and then collectively report the plot. "At first I looked at it as just another way of getting people to come in the bar on Sunday when there's nothing to do," Chadsey said. "Then it became a social event . . . I guess I knew all along there was a gray sea and figured sooner or later someone would blow the whistle on me."

But before that happened, the Annex made the most of its gold mine. When Rich Springfield (a.k.a. Dr. Noah Drake of "General Hospital") came to Washington in June to promote his hit record "Jessie's Girl," the Annex invited him to appear. The crowd loved it "We never expected a mass of screaming women," said Linda Roth, a free-lance promoter who organized the Springfield reception. "Then there was the chain effect -- they were inundated with calls from people wanting to know when they showed 'General Hospital' so they could come and watch."

"We were very open about it," said Davis, who wasn't sure just how ABC heard of the tapings. The Annex owners advertised in the Tribune and posted a small placard outside the Annex.

Concerning possible violation of copyright laws, Davis said, "Oh, sure, everybody knows that." But he and Chadsey said some bars tape sports for their customers and that in the Annex case ABC was being unfair -- discriminating against working women, in fact -- for singling out the soap opera and ignoring wresting, basketball and football.

Ira Gomberg, an attorney for the Sony Corp., had a similar response to that of MAC's Murphy: "It seems to me they [the Annex owners] were serving a commercial purpose." The decision reached in 1979 was very narrow, he said. Consumers may tape and view programs in the privacy of their own home, and that's all. If someone were to loan a tape to a neighbor, Gomberg suggested hypothetically, that is a completely different case and could conceivably violate the copyright laws. "I don't see that what the owners were doing was in a shady area. It was a clear violation."

"We took the position [in the 1976 case ] and we still maintain," Gomberg said," that airwaves are free -- in the privacy of one's own home."

Now that the Annex is at peace with ABC, they have to contend with their own customers. "We had some very, very mad people last Sunday," said Chadsey. Some of the regulars, he said, wanted to picket ABC's downtown offices.

And Chadsey claims that even though "General Hospital" drew crowds of women it was not all that profitable. He says he lowered prices, hired bands, put out free food. And besides, he said, women don't drink very much.