CenterSpan wins rights to Scour technology

CenterSpan Communications won the rights to defunct Scour's file-swapping technology in a bankruptcy auction Tuesday, planting the seeds of a potential competitor to Napster's new music service.

The rights to Scour's technology and much of its engineering talent were sold to the highest bidder in a Los Angeles bankruptcy court. Also bidding were Liquid Audio and Listen.com.

The final price tag on the service was $9 million--more than enough to pay Scour's reported $4 million in debts, but far from the price the once-prominent service would have commanded just months ago. The bid consisted of $5.5 million cash and stock worth $3.5 million.

CenterSpan has said it plans to create a legal file-swapping service, a kind of second generation Napster that will operate within legal bounds set by explicit relationships with the record companies. CenterSpan is moving into the peer-to-peer world after years as a gaming technology.

"The Scour Exchange represents an opportunity to accelerate the introduction of a secure and legal capability into a large existing peer-to-peer channel," said Frank Hausmann, chief executive of CenterSpan, who said the acquisition would be accretive to earnings.

Scour had been one of the stars of the file-trading world, with investments from Hollywood powerbroker Michael Ovitz, and budding distribution relationships with movie studios. Good intentions and high-powered legal advice didn't serve to ward off copyright infringement lawsuits from the record and movie industry associations, however.

That lawsuit, filed in July, eventually led to layoffs and finally Scour's appeal for the court's bankruptcy protection in October.