You are not wrong. And there was a time when such cases were very unclear, even for those with more knowledge than typical known.

I still think that it would now be a better idea to fight. It's a sure 1000€-loss + the unhappy customers (cause of missing free wlan) vs a maybe-loss and a chance to continue the free wlan. But I understand the tought-process you described, and it was maybe a different legal situation.