The company said in a statement that it has laid off 52 of its
70 employees because investors with which it had been negotiating
for additional funding “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 company was sued by the Motion Picture Association of
America (MPAA), the Recording Industry Association of America
(RIAA) and the National Music Publishers Association (NMPA) in July
for copyright infringement by connecting internet users who swap
music and video files through its Scour.com service.
The case is similar to that of Napster, the MP3 file swapping
service. Like Napster, Scour Exchange uses so-called peer-to-peer
technology that lets people access files directly from one
another's hard drives through a central server.
The company’s 24 year-old president and CEO Dan Rodrigues has
tried to distinguished the legality of his company from Napster. He
said:
“We're obliged to provide a process for
copyright holders to notify us of infringing links, then we take
down those links. We also track repeat copyright infringers. We
have a three strikes policy and we kick users off in the event that
they're repeat infringers.”
The company is now reduced to a number of executives and
engineers who will keep the web site operational and continue the
defence against the lawsuit. Dan Rodrigues said: “We remain hopeful
that our dispute will come out the same way that the original David
and Goliath did.”
