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Craigslist Fires Back at eBay With Trademark and Unfair Competition Claims
The Recorder
May 14, 2008
What started out as a boardroom tiff between two of the San Francisco Bay Area's best-known Internet companies has erupted into a spirited litigation battle.
Two weeks after eBay sued Craigslist for diluting its stake in the privately held company, Craigslist fired back with a lawsuit of its own in San Francisco Superior Court on Tuesday.
The peace-loving classified Web site throws a bunch of claims at eBay, including unfair competition and trademark infringement.
The dispute centers around eBay's Kijiji, an online classified site that competes with Craigslist. The complaint claims that inside eBay, Kijiji was called "craigslist killer" and that eBay put a Kijiji insider on Craigslist's board as a spy.
EBay purchased a 28 percent stake in Craigslist in 2004, and received a seat on its board of directors.
Craigslist also suggests that eBay only invested in the company so that it could take it over. Craigslist executives "feared they had a wolf in sheep's clothing in their midst," according to the complaint.
Craigslist is represented by Perkins Coie lawyers and eBay is represented by Cooley Godward Kronish. Lawyers at both firms declined to comment, but an eBay spokeswoman was more talkative.
"We regret that Craigslist felt compelled to resort to unfounded and unsubstantiated claims in order to divert attention from actions by Craigslist's board that unfairly diluted our minority interest," eBay spokeswoman Kim Rubey wrote in an e-mail to The Recorder.
Aside from unfair competition, Craigslist also is accusing eBay of trademark infringement, slightly ironic since eBay is one of the toughest enforcers of its own trademark. The complaint says that eBay posted Google ads with headlines like "Craigslist.org" (and Kijiji in very fine print) that would instead direct users to Kijiji.
In its complaint, filed in Delaware Court of Chancery, eBay claims that after Kijiji's U.S. launch last year, Craigslist founder Craig Newmark and CEO Jim Buckmaster "engaged in a series of clandestine transactions designed to ensure that eBay would not be able to elect a [Craigslist] director, and to either impose new transfer restrictions on eBay or dilute its interests, and to dilute the interest of the employee holders of company stock options."
The complaint also says that many of those "clandestine transactions" took place with the aid of Edward Wes, a corporate lawyer at Perkins Coie, the same firm that filed the suit for Craigslist on Tuesday.
EBay says that Newmark and Buckmaster breached their fiduciary duty and wants the court to force them to take back what they did to eBay's stake.
Craigslist has yet to respond to the Delaware action.
