

Craigslist has filed a countersuit against eBay, alleging that the auction site used its minority stake in Craigslist to engage in unfair and unlawful anticompetitive behavior, false advertising, trademark infringement, and other misdeeds.

With Craigslist's countersuit, the shareholder dispute that started with eBay's lawsuit against Craigslist and then proceeded to hurt feelings and harsh words has now become a pitched legal battle.

The 26-page complaint (.pdf) filed in California Superior Court today details the long, sorry history of the eBay-Craigslist relationship. Sadly for Craigslist watchers, it does not include any financial details of the August, 2004 transaction in which eBay acquired a 25 percent stake in the popular community bulletin board and classified ad site. It does, however, describe a sequence of events in which, Craigslist alleges, eBay executives unilaterally bought out the share of a "former shareholder" (probably Phillip Knowlton, the WSJ reported in 2004) even as negotiations over the terms of the deal were breaking down.

Subsequently, the complaint says, eBay used its position on Craigslist's board to glean inside information, launch a competitor, Kijiji, and then undermine Craigslist's business.

At one point, Craigslist alleges, eBay even placed Google ads whose blue underlined hyperlinks appeared to link to craigslist.org but actually took users to Kijiji.com and eBay.com.

Craigslist founder Craig Newmark and CEO Jim Buckmaster "were taken aback by eBay's behavior, and feared that they had a wolf in sheep's clothing in their midst," the complaint states.

The lawsuit seeks an injunction preventing eBay from using the Craigslist name or brand, and also asks the court to order eBay to "restore to craigslist all shares of the company owned by eBay which were acquired by means of, or for the purpose of, unfair competition; or ... to divest its interests in craigslist." Craigslist is also seeking unspecified damages.

Craigslist executives were not available to comment.

Craigslist Blog: Unlawful and Unfair

Photo: Craigslist founder Craig Newmark would never resort to violence to resolve a dispute: Photo credit: David Sifry/Flickr