Lawsuit-Fighting Scour Lays Off 52 Staffers
Multimedia file search company Scour Inc., which is currently fighting a lawsuit launched by movie studios and record companies, says its legal troubles have forced it to lay off most of its workforce. In a brief press release issued late on Friday, the company said it has trimmed its staff by 52 workers because the high-profile legal case has frightened away potential investors.
The Beverly Hills, Calif., company, which counts Hollywood agent and former Disney executive Michael Ovitz as its largest shareholder, was targeted by the movie business and the record industry for its role in connecting Internet users who swap digital music and videos through its Napster-like Scour Exchange service.
In a statement released on Friday evening, the company said that investors with which it had been negotiating for another round of financing "had decided not to move forward at this time, due to concerns about the cost and management distraction that would result from the company's pending litigation."
The move leaves about a dozen executives and engineers to keep the Scour.com Web site running and to mount what the company said will be a continued defense against the lawsuit.
Last month, the company announced it had assembled a high-powered legal team to wage the battle, a group headed by trial lawyer Fred Bartlit of Chicago-based law firm Bartlit Beck Herman Palenchar & Scott. Also on the team from Barlit's firm is Shawn Fagan, a former editor of the Harvard Law Review and once a clerk for US Supreme Court Chief Justice William Rehnquist. They were joined by Arthur Miller, a copyright expert and Harvard Law School professor, and Peter Toren, a former prosecutor with the Computer Crime and Intellectual Property Section of the US Department of Justice.
Friday's statement quoted Scour's president and chief executive officer, Dan Rodrigues, as saying: "We remain hopeful that our dispute will come out the same way that the original David and Goliath battle did."
Rodrigues said Scour will continue to operate while the lawsuit unfolds.
The company has also launched a special Web site it calls the Scour Technology Freedom Center, dedicated to its own case and to the collision of copyright law and freedom-of-speech issues on the Internet.
Scour's legal troubles began July 20 when the lawsuit was filed in a New York federal court by the Motion Picture Association of America (MPAA), the Recording Industry Association of America (RIAA), and the National Music Publishers Association (NMPA). The three organizations speak for most of the major movie studios, record companies and music publishers.