Craigslist Countersues eBay

Online classifieds site Craigslist has filed suit against eBay, accusing the online auction site of using its ownership stake to steal Craigslist trade secrets.

Last month, online auction giant eBay sued Craigslist, accusing the online classified site of trying to minimize eBay’s stake in the company through a series of behind-the-scenes moves once eBay opened its own online classified ad service Kijiji. Now, the relationship between the two companies is getting even more hostile, with Craigslist countersuing eBay (PDF), accusing ebay of unfair competition and using its minority stake in Craigslist to steal Craigslist trade secrets. And that’s not all: Craigslist also says ebay engaged in false advertising, trademark dilution, and even initiated phishing attacks against the company.

In the complaint, Craigslist accuses ebay of using misleading advertising tactics using Google’s online advertising systems so users seeking Craigslist would see ads directing them to eBay’s Kijiji site—which eBay apparently referred to internally as its “Craigslist killer.” Further, the suit alleges eBay abused its position as a shareholder in Craigslist to gather proprietary, confidential information about Craigslist operations in order to bolster its efforts with Kijiji. “In the months leading up to the launch of its competing Kijiji site [..] eBay used its shareholder status to plant on Craigslist’s board of directors the individual responsible for launching and/or operating Kijiji,” the complaint alleges. “Using the pretext that the information was necessary for Craigslist board-related matters, eBay made constant demands for confidential information in excess of what was required for that purpose.”

The suit asks that the court either require eBay to sell off its interest in Craigslist or return the shares to Craigslist itself. The suit also demands that eBay surrender profits tied to its holdings in Craigslist, along with punitive damages.