• Reuters, Wednesday, May 14, 2008 11 AM

The tussle between Craigslist and eBay is getting real ugly: According to Reuters, Craigslist, which is currently being sued by minority investor eBay, filed its own suit against the online auctioneer on Tuesday, alleging that the company used its minority stake to steal the online classifieds leader's trade secrets. The suit also accuses eBay of copyright infringement and unfair competition through its Kijiji classifieds site, saying that Kijiji ran ads on Google that appeared to be Craigslist ads. The suit demands that eBay, which owns 28.4% of Craigslist, restore to the company or divest all of its holdings.

EBay's suit in Delaware Chancery Court charges the online classifieds giant with using "clandestine meetings" to dilute eBay's stake in Craigslist to 24.85%. In response to the Craigslist suit, an eBay spokesperson said, "We regret that Craigslist felt compelled to resort to unfounded and unsubstantiated claims in order to divert attention from actions by Craigslist's board that unfairly diluted our minority interest." EBay has held a minority ownership in Craigslist for four years now.

With the launch of Kijiji in Asia and Europe in 2005, eBay effectively set up a Craigslist competitor. The site launched in the United States a year ago. Craigslist, in its suit, alleges a plot by eBay to use its position as a minority shareholder to force the classifieds leader into a full-scale acquisition.

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