Craigslist files countersuit against eBay

By Michal Lev-Ram

Craigslist filed a countersuit against eBay Tuesday, alleging that the Internet auction company engaged in unfair competition, trademark infringement and a slew of other improper activities.

The move comes less than a month after eBay (EBAY) sued Craigslist, claiming the privately-held online classifieds company tried to dilute its ownership stake in Craigslist and removed its representative from the board of directors.

The two companies’ unhappy relationship began in 2004, when eBay bought a 28% share in Craigslist from a former employee and shareholder. The suit claims that since then eBay has repeatedly “tried to exert control” over the San Francisco-based community bulletin board.

In the 26-paged suit filed in San Francisco Superior Court, Craigslist claimed that eBay asked for confidential information before launching a competing classified listings site, Kijiji, in 2005. Craigslist also alleges that eBay used its seat on its board to glean information and referred to Kijiji as the “Craigslist killer” within the company. Furthermore, Craigslist charges that eBay ran misleading ads on Google that featured blue underlined headlines such as “Craigslist.org” but linked to Kijiji.com instead.

The company is seeking punitive damages and the return of all Craigslist shares owned by eBay, among other demands.

Craigslist won’t elaborate on its countersuit, and eBay could not be reached for comment Tuesday.

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