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Tuesday, September 20, 2011

EBay vs. Craigslist Lawsuit Heats Up.

Bloomberg News
by Karen Gullo
Sept 16, 2011

EBay Inc. (EBAY)'s lawyer said Craigslist Inc. may have "lobbied" for a criminal subpoena issued in a federal probe into allegations the online auctioneer stole confidential information from Craigslist.

The criminal subpoena issued last week and served on EBay means the exchange of documents and information in Craigslist's lawsuit against EBay should be put on hold, EBay lawyer Mark Lambert said at a hearing yesterday in state court in San Francisco.

EBay vs. Craigslist Lawsuit Heats Up.

The online classified company claims in the lawsuit that San Jose, California-based EBay used proprietary information from Craigslist to start a competing online ad site when the two companies were negotiating over EBay buying a stake in Craigslist. After winning two rulings that the case can proceed, Craigslist is seeking to move ahead with discovery, where the two sides exchange documents and interview witnesses.

"We believe they lobbied for" the subpoena and put it in newspapers yesterday, Lambert said at the hearing. "It names lots of individuals and creates tremendous uncertainty."

"This is something that they took to the authorities, it's of their making," Lambert told Superior Court Judge Richard Kramer, who is presiding over the civil case. "It's a game changer."


The Sept. 7 grand jury subpoena to Craigslist seeks information pertaining to "incidents where EBay employees engaged in alleged criminal activities and misconduct focused around the misappropriation of proprietary/confidential information from Craigslist."

It lists a February 2005 incident in which EBay founder Pierre Omidyar allegedly requested information from EBay and instructed employees to use Craigslist metrics to compare its growth rates with those of EBay's competing website called Kijiji.

Anyone named in the subpoena may want to hire a lawyer and may be unwilling to respond to civil subpoenas in the case, Lambert said.

Michael Clyde, an attorney for Craigslist, told Kramer that the criminal subpoena should have no impact on the civil case.

"There's no reason why we can't finally get started with discovery in this case," he said.

The subpoena "will not cause complete cessation of anything," Kramer said. It will be taken into account in fashioning a discovery plan, he said. The judge scheduled the next hearing in the case for Oct. 18.

EBay said Sept. 13 that the company is cooperating with the U.S. Justice Department investigation.

"We will cooperate with any inquiry related to the disputes between EBay and Craigslist," Amanda Miller, an EBay spokeswoman, said in an e-mail. "EBay believes that Craigslist's allegations against EBay are without merit."