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Scour shut down its Scour Exchange peer-to-peer file-sharing program Thursday morning. The deadline was established Nov. 14 in U.S. bankruptcy court in Los Angeles, after the Michael Ovitz-backed company was granted a motion requesting permission to take down the exchange. U.S. Bankruptcy Judge Kathleen P. March also laid down the ground rules for the bidding procedure for Scour’s assets, which include Scour Exchange, a multimedia search engine and Webcasting software. Any other company wishing to be considered by the court must come forward by Dec. 5. Listen.com, which announced two weeks ago that it had agreed to buy Scour’s assets for $5 million in cash and some 500,000 Listen shares, would then have one week to make a counteroffer. On Dec. 12, Judge March will supervise an auction in which the first bid must beat Listen’s offer by at least $200,000. All bids thereafter must then increase by at least $50,000. If Scour’s assets are awarded to a buyer other than Listen, the buyer must pay Listen $200,000. A company called CenterSpan has already announced its intentions to challenge Listen.com’s offer. The Hillsboro, Ore.-based software maker is developing a peer-to-peer network that incorporates digital rights management. Listen.com representatives had no comment on CenterSpan’s plans. But industry sources speculate that Listen, with its considerable cash reserves, would readily outbid any challenger — especially since it garnered so much press attention when it announced that it had agreed to acquire Scour’s assets. Losing the auction, say observers, would make Listen.com look foolish. The shutdown of Scour Exchange is no surprise; it was only a question of when. Listen.com said the controversial file-sharing program would be shut down prior to an acquisition. CEO Rob Reid said at the time of its bid that he expects to build a legal file-sharing service with Scour’s technology that Listen would syndicate to content owners. Scour Exchange, which enables users to freely trade multimedia files including music and movies, drew the ire of the motion picture, recording and music publishing industries, which sued Scour in July. Legal woes forced the Internet company into bankruptcy last month, a move that effectively froze litigation. It is unclear what effect the shutdown of Scour Exchange will have on the lawsuit, which is now under the discretion of the bankruptcy court. “We believe the decision to take down the exchange will facilitate a resolution of the litigation,” said a spokeswoman for Scour. Scour’s lawyers from Perkins Coie also disclosed in court today its ownership of one-tenth of a percent of Listen.com equity. The “conflict of interest” prompted Judge March to rule that for matters relating to the sale of its assets, Scour would have to obtain a different law firm. Scour’s fate has played out very differently from Napster’s. Two weeks ago Napster and Bertelsmann shocked the music industry when they announced a broad alliance that included a loan to Napster, rumored to be around $50 million, and a vow to drop BMG’s lawsuit once Napster implements a secure file-sharing system that compensates rights holders. The German media giant also holds warrants to buy a majority stake in the rebel software company. Laura Rich contributed to this report. Related Articles from The Industry Standard: Listen.com Bids $5.5M for Scour Scour Files for Bankruptcy Scour Searches for a Cure Copyright � 2000 The Industry Standard

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