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EBay, Craigslist Set For Legal Battle In Delaware Court

December 7, 2009

The court battle between online auction company eBay and online classified firm Craigslist is underway in a Delaware court room.

In April 2008, eBay filed a lawsuit against Craigslist, claiming that its founder Craig Newmark and Chief Executive Jim Buckmaster diluted eBay’s stake in Craigslist from 28 percent to 24 percent.

The accused dilution resulted in eBay losing its seat on Craigslist’s board.

Ebay’s former chief executive Meg Whitman is expected to take the witness stand on Monday.

Craigslist founder Newmark and eBay founder Pierre Omidyar are also expected to testify during the trial.

Last year, Craigslist filed a countersuit claiming that eBay had acted unethically by using its position to gain confidential information in an effort to launch a competing classified site, called Kijiji.

EBay purchased its stake in Craigslist in 2004, just one year before launching Kijiji.

“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,” the company said in a pre-trial briefing.

Craigslist has denied that eBay told the company of its plans to launch Kijiji.

“We are very confident we acted properly throughout the relationship,” eBay’s deputy general counsel Mary Huser told Reuters last week. “We were open and honest regarding what we were doing and our intentions.”

The trial is expected to highlight the differences in business structures between the two widely known Web firms.

According to Reuters, eBay generated $8.5 billion in 2008 revenue with thousands of employees and has recently been making a larger effort to broaden its market beyond its traditional online auctions.

Craigslist holds just a few dozen employees and is widely known for its free online classified services.

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