Entertainment Firms Team Up to Sue Scour Inc.

Continuing the war against online services that allow computer users to trade movies and songs for free, Hollywood’s largest film studios have teamed up with major record companies and music publishers to file suit against Scour Inc., a Beverly Hills new-media venture backed by former super-agent Michael Ovitz.

The copyright infringement suit against Scour, filed Thursday in U.S. District Court in New York, pairs the Motion Picture Assn. of America with the Recording Industry Assn. of America.

It also puts Ovitz in an awkward position, one from which he is frantically trying to distance himself: Scour created a tool that lets consumers exchange multimedia files over the Net, including bootleg copyrighted material owned by clients of Ovitz’s talent management agency, Artists Management Group.

Scour subscribers had bootlegged copies of films such as “The Perfect Storm” and “The Patriot,” as well as songs by Elvis Presley, the Grateful Dead and the Beatles.

The suit seeks to block Scour from operating its Scour Exchange service, which allows consumers to copy and swap with one another digitized versions of songs, movies, photographs and other multimedia files.

Technology experts say the free Scour Exchange--or SX--software patterns itself after the file-sharing program developed by Napster Inc. But while Napster lets consumers swap only music files, Scour Exchange allows people to search for a variety of multimedia products, including songs, movies photographs and other images.

The recording industry association is currently embroiled in a legal fight against Napster and music service provider MP3.com. Noting that each case is different, MPAA President Jack Valenti said Scour knowingly helped consumers pirate movies and music.

“Scour is Napster with movies,” Valenti said. “They are taking something that doesn’t belong to them, and they are taking for free. This is a simple case of theft.”

Thursday’s suit was filed by 16 record companies, among them Warner Bros. Records, Virgin Records America, and BMG Music; and eight film studios, including Fox, Paramount, Disney Enterprises and Columbia Pictures. Joining them as plaintiffs are music publishers Jerry Leiber and Mike Stoller.

Scour executives said they were shocked by the lawsuit, “given our productive conversations just this week with Sony, Warner and BMG regarding establishing business relationships with these companies.” They also note that Scour has licensed content agreements from Miramax and Hollywood Records, both of whom are plaintiffs in this lawsuit.

Nearly 1.5 million people have downloaded the free Scour Exchange software since it was launched this year, the company said. Plaintiffs in the Scour complaint seek statutory damages of $150,000 for each copyrighted work infringed.

If each person who downloaded the Scour Exchange software bootlegged a single song or movie, the damages would hit $225 billion. That tops the gross domestic product of Sweden.

The music industry has already blocked Scour rival MP3.com from operating its own song-sharing service and has asked a federal judge in California to stop Napster’s service.

The Scour Exchange lawsuit comes a week after the company halted its controversial Web search practice, which had allowed outsiders to peek at digital entertainment files stored in personal computers, sometimes without the owner’s knowledge.

Ovitz declined to comment on the suit.

Valenti said that officials from both the RIAA and the MPAA tried to contact Ovitz before the litigation without success. In a letter to Ovitz dated May 25, RIAA President Hilary Rosen wrote that she believed “Scour Exchange is engaging in unlawful activities.”

Sources close to Artists Management Group say Ovitz “has no control over Scour or what Scour’s board of directors does.” Ovitz is not on Scour’s board of directors, but at least two executives from AMG are board members.

“To say that Mike Ovitz was not controlling what was going on at Scour is laughable,” said Ari Swiller, spokesman for Yucaipa Cos., another Scour investor. “This is vintage Ovitz. He’s doing the Mike Ovitz dance of getting himself out of a tough situation.”

In 1999, Ovitz and Yucaipa, the Los Angeles-based investment company headed by grocery-store billionaire Ron Burkle, invested an undisclosed amount into Scour.