Whitman takes stand in eBay-Craigslist suit

Legal smackdown kicks off Monday. EBay founder Omidyar to testify after the gubernatorial candidate.

Two Internet giants are squaring off in a Delaware court Monday, dragging in one of California’s foremost gubernatorial candidates as the first witness.

EBay and Craigslist have filed suits against each other in a dispute over the size of eBay’s minority stake in Craigslist. Meg Whitman, who was CEO of eBay when it invested in the online classifieds company in 2004 and is now running for California governor, will take the stand as the trial opens Monday. WSJ has the full story.

EBay’s original suit, filed in 2008, alleges that Craigslist founder Craig Newmark and CEO Jim Buckmaster illegally diluted eBay’s stake from 28% to 24% by issuing more stock, thereby taking away eBay’s right to elect a board member.

Craigslist then filed a countersuit alleging eBay used its investment to steal confidential information used to create a competing service called Kijiji. Ebay bought its stake in 2004, launched Kiijiji overseas the following year, and brought it to the U.S. in 2007. On it’s blog, Craigslist listed a hefty string of charges:

“We filed a complaint in California today, charging eBay with unlawful and unfair competition, misappropriation of proprietary information, deceptive passing-off, business interference, false advertising, phishing attacks, free-riding, trademark infringement, trademark dilution, and breaches of fiduciary duty.”

Ads like those pictured at right using Craigslist’s name to market Kijiji made Newmark & Co. particularly angry. They were removed shortly after the Craigslist team posted a complaint on their blog.

Not surprisingly, both parties have denied the claims brought against them.

After Witman takes the stand Monday, eBay founder Pierre Omidyar will follow, and Newmark and Buckmaster will testify for Craigslist.

eBay’s deputy general counsel Mary Huser said that eBay informed Craigslist at the time of the deal that they planned to launch their own classifieds service and acted properly.