Craigslist claims eBay has "unclean hands"

 

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By Reuters

Posted on 3 Dec 2009 at 11:39

After almost two years of wrangling, eBay and Craigslist are heading to court to resolve a bitterly contested case concerning the ownership of a minority stake in the classified-ads company.

In a lawsuit filed in 2008, eBay accused Craigslist founder Craig Newmark of hatching a "coercive plan" and conducting "clandestine transactions" to dilute eBay's stake in the company to 24.85% from 28.4%.

Because eBay's ownership fell below 25%, it lost its seat on Craigslist's board, allegedly costing it millions of dollars in the process.

EBay has unclean hands fuelled by a frustrated desire to own Craigslist outright

Craigslist hit back in a separate lawsuit, which charged eBay with unfair competition, misappropriation of proprietary information, false advertising, trademark infringement and other deceptive practices.

In both cases, Craigslist claims that eBay used its seat on the board to obtain information and expertise to launch a competing classified advertising business, all the while denying that was it's intention.

In the run-up to the trial of the Delaware lawsuit, which is expected to last two weeks, Craigslist has depicted its larger rival in an unsavory light.

"EBay has unclean hands fuelled by a frustrated desire to own Craigslist outright," Craigslist said in a pretrial brief. "If it could not own Craigslist, eBay would exploit its position as an insider and use Craigslist's confidential information, experience, skill and innovations against Craigslist."

Craigslist also claims that eBay used deceptive tactics to direct traffic away from its site, referring to online ads allegedly paid for by eBay that used Craigslist's name but diverted users to Kijiji or eBay.