Scour Files for Bankruptcy

Scour has become the latest Web casualty, as the fallout continues from the controversy over online file swapping. The embattled Web site has filed for bankruptcy.

The move comes nearly three months after Scour was slapped with a lawsuit alleging copyright infringement on music and movies.

The company, backed by Hollywood mogul Michael Ovitz, has filed a voluntary petition for Chapter 11 bankruptcy in order to ensure continued operation in the face of lawsuits, including one from the Motion Picture Association of America and the Recording Industry of Association of America filed in July, and to continue its evaluation of various strategic business alliances, Scour officials said in a statement. (See "Getting Caught in the E-Music Trap.")

The bankruptcy filing will allow the company's management and board of directors time to develop recapitalization and restructuring alternatives to strengthen the company, which was founded in 1997, Scour President Dan Rodrigues said in a statement.

Scour, based in Beverly Hills, California, offers its users an Internet search engine program that lets them swap multimedia files through a file-sharing program. Services through Scour.com will continue to be available during bankruptcy proceedings.

In July, the MPAA and RIAA filed a suit against Scour alleging copyright infringement on members' music and movie materials. The suit seeks not less than $150,000 for each copyrighted work that was infringed upon and asks for a permanent injunction to force Scour to stop giving access to copyrighted material.

Scour had to lay off most of its employees in September. But the company had announced early this week that it had inked a deal with United Devices, a Softbank-funded distributed-computing startup. Austin, Texas-based United Devices will pay Scour to help distribute United Devices' free software to the 4 million people who trade media files with Scour Exchange.