Judge urges eBay, Craigslist to resolve dispute

AP News
Posted: Dec 17, 2009 2:29 PM

After a trial lasting almost two weeks, the judge presiding over a lawsuit pitting online auctioneer eBay against online classifieds company Craigslist urged the two companies Thursday to try to resolve their differences before he issues a ruling.

"I have an uncanny ability to make everyone unhappy," Chancellor William Chandler III advised attorneys at the conclusion of the trial, adding that having the Delaware court resolve the dispute between the two Internet giants is "the second best way to do it."

Chandler said a resolution worked out by the companies themselves likely would be more acceptable to both sides than what he might decide.

"I'm not suggesting it would be an easy process," said the judge, who in the meantime will immerse himself in trial exhibits and testimony and accept post-trial briefs in preparation for a ruling, which could take months.

"I'm likely to take a little bit of time to give you a decision," he warned attorneys.

Craigslist CEO James Buckmaster declined to comment on the judge's suggestion. eBay attorney Michael Rhodes said such advice by a court is not uncommon, but that he would keep an open mind and consider "anything that anybody wants to throw at me."

Chandler indicated that any ruling he issues likely would not be a "grand slam home run" for either side, but instead would include "good and bad" for each.

In its lawsuit, eBay is challenging actions taken by Buckmaster and Craigslist founder Craig Newmark to dilute eBay's 28 percent minority stake in Craigslist after eBay began competing with Craigslist in the U.S. in 2007.

Craigslist says the protective measures were justified because of eBay's misuse of confidential Craigslist information to start its competing Kijiji Web site, its insistence on gaining control of Craigslist after taking a minority stake in 2004, and its refusal to make good on its promise to help Craigslist expand internationally.

eBay began acquiring online classified sites overseas around the same time it took a stake in Craigslist, followed by the launch of Kijiji abroad in 2005. But Craigslist officials say they were caught off guard when given 10 days notice of Kijiji's impending U.S. launch in 2007.

Craigslist officials said eBay CEO Meg Whitman, now running for California governor, had assured them that Craigslist would be eBay's exclusive play in the online classifieds market in the U.S., and that the two companies would part amicably if a three-year "courtship" period didn't work out. They testified that they didn't challenge the overseas acquisitions because they understood those properties would eventually be folded into an international partnership with eBay.

eBay argued that it had the explicit right to compete broadly with Craigslist, even though it was a major shareholder and held one of only three Craigslist board seats. According to eBay, the protective measures taken by Craigslist should be disallowed because the sole penalty for competing head-to-head with Craigslist in U.S. jobs postings was the loss of certain special rights granted to eBay under the shareholders agreement.

"This is a relationship that started out with good intentions, I think," said the judge, acknowledging that Craigslist and eBay seemed to have different corporate cultures.

During the trial, witnesses repeatedly noted that Craigslist, unlike many public corporations, was not intensely revenue-driven, but more concerned about nurturing a community of devoted users.