PERKINS COIE LLP DAVID T. BIDERMAN (SBN 101577) E-mail: DBiderman@PerkinsCoie.com DAVID P. CHIAPPETTA (SBN 172099) E-mail: DChiappetta@PerkinsCoie.com JASON A. YURASEK (SBN 202131) E-mail: JYurasek@PerkinsCoie.com Four Embarcadero Center, Suite 2400 San Francisco, California 94111 Telephone: (415) 344-7000 Facsimile: (415) 344-7050 Attorneys for Plaintiff craigslist, Inc. SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF SAN FRANCISCO Case No. CGC-08-475276I. INTRODUCTIONcraigslist, Inc., Plaintiff, v. eBay Inc.; eBay Domestic Holdings, Inc.; and Does 1 through 100, inclusive, Defendants. COMPLAINT FOR:JURY TRIAL REQUESTEDUNFAIR AND UNLAWFUL COMPETITION UNDER CAL. BUS. AND PROF. CODE § 17200 FALSE ADVERTISING UNDER CAL. BUS. AND PROF. CODE § 17500 CALIFORNIA TRADEMARK INFRINGEMENT AND UNFAIR COMPETITION CALIFORNIA PASSING OFF AND UNFAIR COMPETITION DILUTION UNDER CAL. BUS. & PROF. CODE § 14200 BREACH OF FIDUCIARY DUTY
1. craigslist and its 25 San Francisco employees operate websites designed to serve local communities with classified ad placements and other services. Other than small fees for job postings in ten cities and brokered apartment rentals in one city, craigslist provides its services to the public free of any charge. In August 2004, eBay Inc. and its subsidiary eBay Domestic Holdings, Inc. (collectively, "eBay") acquired a minority interest in craigslist from a former shareholder. This acquisition followed repeated representations to craigslist by eBay's top executives regarding the community values they shared with craigslist, and after repeated assertions regarding the benefits that would be enjoyed by craigslist users, the greater internet community, and the general public. Since acquiring its interest, however, eBay has instead engaged in conduct designed to harm craigslist, its users, and consumers in California and elsewhere. This conduct includes but is not limited to 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.
2. As a company that now directly competes with craigslist through its Kijiji classified ads website launched in the United States in 2007, eBay cannot deny that it has certain duties under the law. Yet eBay has chosen to ignore these duties and, without this Court's intervention, it will continue to do so. By way of example, eBay has engaged in the following wrongful behavior:
* In the months leading up to the U.S. launch of its competing Kijiji site (referred to inside eBay as the "craigslist killer"), eBay used its shareholder status to plant on craigslist's board of directors the individual responsible for launching and/or operating Kijiji and other eBay classifieds properties in Europe;
* Later recognizing the antitrust risk of having a Kijiji insider serve on craigslist's board, eBay withdrew him, but then proceeded to nominate a second Kijiji insider, namely the individual responsible for Kijiji's worldwide competition policy;
* Throughout its tenure as a craigslist shareholder, under the guise of shareholder requests for information, eBay has hounded craigslist with improper demands for confidential craigslist information which could be used for anticompetitive purposes; and
* eBay has used craigslist's mark and name in commerce to confuse the public and illegally divert internet traffic from craigslist to eBay and its Kijiji site.
3. eBay's improper conduct has not relented and, absent judicial intervention, eBay will continue to abuse its position. craigslist therefore brings this action against eBay to remedy the substantial and ongoing harm to fair competition - including harm to craigslist and California consumers - through a concerted scheme by eBay and its agents to: (i) interfere with craigslist's business and operations, (ii) unfairly trade on craigslist's confidential and proprietary competitive information - gained in its capacity as a craigslist shareholder and board member - in order to unfairly compete, and (iii) infringe on craigslist's trademark and trade name in order to phish internet traffic away from craigslist and toward eBay's own websites. eBay's unfair trade practices have harmed and, unless enjoined, will continue to cause irreparable harm to craigslist, its employees, millions of consumers, fair competition, and the people of California.
II. JURISDICTION
4. This is a civil action arising under the trademark, corporate, and unfair competition laws of the State of California, and California common law.
5. This Court has personal jurisdiction over eBay by virtue of it transacting and doing business in the City and County of San Francisco as described herein, and since eBay's principal place of business is located in the State of California.
III. VENUE
6. Venue is proper in this Court because a substantial part of the events giving rise to this action occurred in the City and County of San Francisco.
IV. THE PARTIES
7. craigslist, Inc. is a Delaware corporation, with its principal and sole place of business in San Francisco, California. craigslist's predecessor in interest was 1010 Cole Street, Inc., a California corporation (collectively "craigslist").
8. craigslist is informed and believes, and on that basis alleges, that defendants eBay Inc. and eBay Domestic Holdings, Inc. are Delaware corporations with their principal places of business located in San Jose, California. craigslist is further informed and believes eBay Domestic Holdings, Inc. is a wholly owned subsidiary of eBay Inc.
9. Does 1-100 are persons or entities responsible in whole or part for the wrongdoing alleged herein. craigslist is informed and believes and thereon alleges that each of the Doe Defendants participated in, ratified, endorsed, or was otherwise involved in the acts complained of, and that they have liability for such acts. craigslist will amend this Complaint if and when the identities of such persons or entities and/or the scope of their actions become known.
V. FACTS GIVING RISE TO ALL CLAIMS FOR RELIEF
11. Since at least January 2003, an individual (the "Former Shareholder") claiming to be the record holder of a minority interest in craigslist (the "Minority Interest") had been actively seeking to find a purchaser for this interest. craigslist advised the Former Shareholder that it would support a sale of the Minority Interest to a third party (including waiving objections that the Minority Interest had not been properly issued), but only to persons who shared a common vision with the Company.
12. On information and belief, in April 2004, Garrett Price, eBay's then Senior Director of Corporate Development, contacted the Former Shareholder and expressed eBay's interest in purchasing the Minority Interest.
13. craigslist was first advised of eBay's interest through the Former Shareholder's counsel on May 4, 2004, and at that time was told that eBay agreed with craigslist's vision and was willing to accept a minority stake in craigslist.
14. On May 5, 2004, the Former Shareholder advised craigslist that several individuals at eBay, including Pierre Omidyar, Margaret C. "Meg" Whitman, Jeff Jordan, Garrett Price, and Brian Levey, Esq., had an interest in discussing with craigslist a potential purchase of the Former Shareholder's stock.
15. craigslist agreed to meet with eBay. Early on in the discussions, eBay submitted an extensive list of "investor protections and recapture rights" which were not included in the Minority Interest. The list included extensive blocking rights on virtually all forms of corporate transactions, the right to approve craigslist's budget and its hiring and firing of officers, the right to financial information, a put/call allowing eBay to increase its share in the company to 50%, and a right of first refusal regarding sales of stock by craigslist or by any of craigslist's stockholders.
16. On or around June 10, 2004, eBay and craigslist representatives met to discuss eBay's proposed protections and recapture rights. craigslist advised eBay that its proposals were overreaching and unacceptable, and that any special rights which eBay did require would need to be purchased. eBay agreed, and negotiations continued between the parties. These negotiations all took place in the City and County of San Francisco.
17. On Tuesday, July 20, 2004, craigslist informed eBay that it had decided to discontinue discussions with eBay due to eBay's continued unreasonable demands, and that an alternative buyer would need to be found for the Minority Interest.
18. On Wednesday, July 21, 2004, eBay invited craigslist to a meeting which was to take place the next day, at which Ms. Whitman, eBay's then President and Chief Executive Officer, would personally present her case for why craigslist should welcome eBay as a shareholder. That evening, eBay's counsel circulated a revised term sheet, which was described as a term sheet for a "basic investment, without any extraordinary rights or obligations."
19. The parties met on July 22, 2004, as eBay requested. In attendance (among others) were Ms. Whitman and Michael Jacobsen (eBay's Senior Vice President and General Counsel) from eBay, and Mr. Newmark and Jim Buckmaster (craigslist's Chief Executive Officer) from craigslist. Ms. Whitman mentioned how much she loved craigslist, and even noted that one of her sons had successfully used the site when locating an apartment. She said that eBay and craigslist were similar companies, in that the strength of each was in their very loyal communities, and that the success of both companies had resulted from listening to what their communities wanted. She emphasized that eBay espoused very high values and pointed to the "Code of Conduct" created by eBay's founder, Pierre Omidyar, which at that time was featured prominently on the eBay website.
20. Ms. Whitman stated how much eBay could help craigslist on issues such as "trust and safety," where eBay had many years of experience, as well as in operating in international environments, where eBay also had substantial expertise and "on the ground" resources. She said that she viewed eBay's purchase of a minority interest as a courtship, and that craigslist should be happy that eBay was interested in helping craigslist and was willing to acquire the minority stake. Ms. Whitman further committed to craigslist that eBay would drop demands previously made for a bigger interest in craigslist than was presently being offered for sale by the Former Shareholder.
21. Mr. Newmark and Mr. Buckmaster were impressed by Ms. Whitman's presentation; most notably the importance to eBay of its community and eBay's dedication to Pierre Omidyar's Community Values - particularly the values that "We believe that people are basically good;" "We believe that an honest, open environment can bring out the best in people;" and "We encourage you to treat others the way you want to be treated." These were very similar to craigslist's own principles and, in reliance on eBay's expressed commitment to these principles, along with Ms. Whitman's representations, craigslist agreed to resume discussions.
22. Meanwhile, in light of eBay's previous unreasonable demands, craigslist and the Former Shareholder were actively exploring alternative options. eBay became aware of these efforts and, on or around July 31, 2004, Ms. Whitman and Rajiv Dutta (eBay's Chief Financial Officer) cancelled a business trip and flew back to the Bay Area to meet with the Former Shareholder. During a weekend meeting at the Former Shareholder's home, they purchased an option to acquire the Minority Interest, thus precluding craigslist from finding an alternative home for the interest. eBay's purchase of the option effectively terminated the efforts of an alternative investor, which to that point had been actively pursuing a purchase of the Minority Interest and had already submitted a term sheet in connection with a potential acquisition. With its other options now foreclosed, the Minority Interest was repurchased by craigslist and new shares in craigslist along with certain other rights were issued to eBay on or about August 9 and August 10, 2004.
23. As indicated above, Mr. Newmark and Mr. Buckmaster placed critical importance on what eBay asserted to be shared community values. They also gave particular weight to Mr. Omidyar's laudable philanthropic activities. On August 7, 2004, shortly before the eBay investment was finalized, Mr. Buckmaster requested in an e-mail to Ms. Whitman that - if the transaction proceeded - Mr. Omidyar be named as the eBay representative to the craigslist board of directors:
"in addition to sending the strongest possible positive message to the craigslist community, the idea of having pierre and craig on the same board is extremely exciting, and i don't think that i exaggerate in suggesting that the ensuing collaboration could have far-reaching positive implications for humanity, not-to-mention our respective organizations and communities."24. Following announcement of eBay's acquisition of the Minority Interest, Mr. Newmark explained in his blog his reasons for welcoming eBay:"i should also mention that craig has immense respect for pierre, and it would mean a lot to him personally to have such a giant and pioneer of online community working with us at craigslist in this capacity."
"Although I never figured that part of craigslist might be owned by a public company, Meg Whitman and Pierre Omidyar showed that they were interested in us for all the right reasons."25. At the time, eBay did not disagree with Craig's impression, but instead enthusiastically embraced it. For example, when Mr. Price of eBay (who witnessed virtually all of the negotiations involving the transaction) was provided a late draft of Craig's blog entry, his response was "[I] Love it." However, eBay did not post a link to Craig's blog entry on its own website once the transaction had closed, as eBay had promised it would."Like craigslist, eBay is about helping folks get everyday stuff done, on a level playing field - they emphasize trustworthiness and reputation, and try really hard to listen to people. Basically, we're both about building community, ad humanizing and democratizing the 'net, and there's gotta be more of that."
27. Notwithstanding Ms. Whitman's assurances that eBay would be content with a minority stake in craigslist, and that any increased investment would be considered only after a "courtship" period during which eBay would need to persuade a skeptical Mr. Newmark and Mr. Buckmaster that such an investment would be for the benefit of the craigslist community, eBay almost immediately resumed pressuring Mr. Newmark and Mr. Buckmaster for additional equity in craigslist. In November 2005, after eBay acquired Marktplaats, a classifieds site in the Netherlands, Garrett Price stated: "We just purchased the largest classifieds site in the Netherlands for $290 Million, what do you think we would pay for the largest classifieds site in the United States?" In the first craigslist board of directors meeting attended by Mr. Omiydar, under an agenda item called "craigslist-eBay Relationship Goals," eBay stated that "eBay has successfully followed a strategy of working extremely closely with affiliates on their path to becoming wholly-owned subsidiaries of eBay Inc." During this meeting, eBay cited numerous examples of staged acquisitions of companies in various countries, where eBay initially acquired only a portion of the company, but ultimately succeeded in purchasing the companies in their entirety.
28. Notwithstanding its minority investor status, eBay tried to exert control over craigslist. For example, eBay pressured craigslist to allow eBay employees to work out of craigslist's office and, in a February 1, 2005 board presentation, eBay asserted that "It is critical for the craigslist-eBay relationship that eBay DNA becomes a part of craigslist and vice versa."
29. In a variety of ways, eBay attempted to treat craigslist as if it were one of eBay's subsidiaries. For example, eBay claimed that - as a shareholder - it should not have to pay for the large volume of job-posting advertisements which eBay had placed on craigslist. Likewise, even though issuance of company stock options to craigslist employees was specifically agreed upon at the time of eBay's investment, eBay pressured craigslist to refrain from issuing employee options on craigslist stock in favor of other alternatives such as options on eBay shares.
30. Moreover, using the pretext that the information was necessary for craigslist board-related matters, eBay made constant demands for confidential information in excess of what was required for that purpose. This included information regarding planned launches by craigslist in new cities, information on growth of traffic in cities where craigslist had already launched, detailed information regarding craigslist's expenses, and overall craigslist site metrics. eBay even went so far as to request real-time access to craigslist's computer systems so that eBay could directly monitor craigslist site usage data, giving eBay the same access to this proprietary information that craigslist itself had.
31. Mr. Newmark and Mr. Buckmaster were taken aback by eBay's behavior, and feared that they had a wolf in sheep's clothing in their midst. However, they still had tremendous respect for the moral compass of Mr. Omidyar, and craigslist tried to review in good faith even extreme proposals made by eBay, particularly since many of the proposals were couched in terms of community service.
32. Mr. Newmark and Mr. Buckmaster did, however, share their frustrations about eBay's conduct with Mr. Omidyar at the craigslist Board of Director's meeting that was held March 28, 2005.
33. But these and other efforts to communicate their concerns to eBay fell on deaf ears. Only two days after the board meeting, on March 30, 2005, Mr. Price (who was in attendance at the board meeting) conveyed that eBay was frustrated with its relationship with craigslist at eBay's very highest levels. In an e-mail to Mr. Buckmaster, Mr. Price stated:
" . . . far far more important, is that we conclusively move past the current limbo we are in with respect to alignment that is putting a strain on our relationship, driving our execs (especially Meg) to distraction and preventing us from learning all we could from one another; . . ."
34. In November 2005, after serving on the craigslist board of directors for less than a year, Mr. Omidyar was replaced on the board by Joshua Silverman, who would later be named Chief Executive Officer of eBay's Skype division. Mr. Newmark and Mr. Buckmaster have had no substantive dialogue with Mr. Omidyar since that time.
36. On June 29, 2007, eBay launched the Kijiji classified website in the United States. The site allowed the posting of online classified advertisements for jobs in the United States, in direct competition with craigslist. On that same day, craigslist notified eBay that this constituted direct competition which would, of necessity, result in the forfeiture of certain of eBay's rights.
37. As indicated above, when eBay originally acquired the Minority Interest, its first designee to serve on craigslist's board of directors was eBay founder and chairman, Mr. Omidyar. Later, on November 21, 2005, eBay formally appointed Mr. Silverman, who was then serving as Vice President Europe, eBay New Ventures, as a replacement for Mr. Omidyar on the craigslist board. Mr. Silverman was responsible for launching and/or operating Kijiji in Germany, Italy, and France and, according to eBay, was responsible for "leading the launch of eBay's European Classifieds business." One week after it announced it was commencing direct competition with craigslist in the U.S. through its Kijiji website, Brian Levey, who was then eBay's Associate General Counsel, on July 6, 2007, sent craigslist a letter containing the resignation of Mr. Silverman as the eBay designee on craigslist's board of directors. In an accompanying letter, Mr. Levey designated Mr. Thomas Jeon, eBay's competition counsel, to replace Mr. Silverman on the craigslist board of directors.
38. Although Mr. Silverman's resignation did not address his reasons for withdrawing, and Mr. Levey's letter did not address the reasons for replacing Mr. Silverman, in hindsight they are obvious. Though it did not state so in its July 6, 2007 letter, even eBay could not with a straight face insist that it was appropriate to have Mr. Silverman, with his eBay classifieds background, serve as a craigslist board member. eBay also did not address the impropriety of having had Mr. Silverman serve on the craigslist board while eBay was secretly formulating its plans to directly compete with craigslist.
39. Moreover, eBay's designation of Mr. Jeon far from solved the problem. eBay justified its designation of Mr. Jeon on the basis that he had not had, and would not have any involvement in eBay's classifieds business in general, or Kijiji specifically. However, it appears that representation was and is false. Mr. Jeon in fact now admits to being "responsible" for Kijiji's "world-wide competition policy."
41. Both before and after the June 29, 2007 Kijiji launch date in the United States, eBay made repeated requests for detailed confidential competitive craigslist information under the guise of a member of craigslist's board of directors and a friendly investor. Indeed, while building its Kijiji U.S. website, eBay continued to request detailed confidential craigslist information, and to receive certain confidential information, without disclosing to craigslist that it was simultaneously building a competitive website.
42. Since June 29, 2007, eBay has continued to demand access to confidential competitive craigslist information. For example, eBay repeatedly requested information regarding business plans, business strategy, head count, lease terms, and specific spend categories (including legal fees and expenses, marketing expenses, and the like). eBay had no right to this information, and such information in the hands of a direct competitor would likely harm consumers and competition. Moreover, even after it commenced directly competing with craigslist, eBay attempted to place an eBay agent on the craigslist board. This despite the fact that board members have access to information that would likely be abused by a direct competitor.
43. Permitting a direct competitor access to competitive information through shareholder requests, or by virtue of having a board seat, runs a significant risk of harm to competition, and as a result would be unfair and unlawful under California law. A direct competitor having access to and use of such information also constitutes free-riding, which would result in the discouragement of innovation, product development, and investment, all to the harm of competition in a manner that is unlawful and unfair under California law. Likewise, participation on a competitor's board of directors, particularly including participation in the discussions and voting conducted during those meetings, runs the significant risk of harm to competition and is therefore unfair and unlawful under California law. eBay's conduct, as specified above, threatens each of these forms of competitive harm.
44. eBay's continuing to hold significant amounts of craigslist stock once eBay decided to directly compete against craigslist also provides an incentive for eBay to act anti-competitively in conducting its own business affairs, harming competition in a manner that is unfair and unlawful under California law.
> U.S. Registration No. 2395628 for CRAIGSLIST for "Advertising and information distribution services, namely, providing classified advertising space via the global computer network" and "Providing an online interactive bulletin board featuring job listings, event listings, commercial notices and resume listings," filed on October 30, 1999; registered on October 17, 2000; and having a first use date of July 1, 1995. craigslist is the incontestable owner of this trademark;46. Despite knowing that craigslist owns the rights to the CRAIGSLIST mark and name, eBay infringed those rights by knowingly engaging in a pattern of false advertising and trademark and trade name infringement in order to exploit craigslist's trade rights and unlawfully divert internet traffic from the craigslist domains to eBay's own Kijiji and eBay domains.> U.S. Registration No. 2905107 for CRAIGSLIST for "Providing online interactive bulletin boards for transmission of messages among computer users concerning classified listings and listings for announcements, events, classes, meetings, activities, housing, real estate, roommates, rentals, for sale advertisements, want ads, employment, resumes, volunteerism, services, community, personals, politics, family, arts and information on a wide variety of topics of general interest to the public; providing on-line forums and discussion groups for transmission of messages among computer users concerning health, family, arts, politics, leisure, romance, work, and information on a wide variety of topics of general interest to the public; electronic mail services; electronic mail subscription services; and electronic transmission of messages, data and images," filed on November 5, 2003; registered on November 23, 2004; and having a first use date of July 1, 1995;
> U.S. Registration No. 2985065 for CRAIGSLIST for "Advertising and information distribution services, namely, providing classified advertising space via the global computer network; providing consumer product and service information via the Internet; promoting the goods and services of others over the Internet; providing an online business information directory on the Internet; computerized database management; promoting and advertising information about the professional services of others; providing on-line computer databases and on-line searchable databases featuring classified listings and want ads; providing on-line computer databases and on-line searchable databases featuring information, classified listings and announcements about employment information and resumes, job openings, volunteer information and volunteer opportunities through community and charitable organizations and businesses, information about community service programs, information about politics, business events, and business meetings; classified listings for rentals of a wide-variety of consumer and business goods; computer services, namely, providing on-line computer databases and on-line searchable databases featuring consumer information on a wide variety of topics of general interest to the consuming public," filed on November 5, 2003; registered on May 24, 2005; and having a first use date of July 1, 1995;
> U.S. Registration No. 3008562 for CRAIGSLIST for "Providing on-line computer databases and on-line searchable databases featuring information, classified listings and announcements about housing, apartments, condominiums, town homes, real estate, commercial real estate, roommate-wanted, and rental and leasing and for sale advertisements for the forgoing" (having a first use date of July 1, 1995) and "Computer services, namely, hosting online web facilities for others for organizing and conducting online meetings, gatherings, and interactive discussions; and computer services in the nature of customized web pages featuring user-defined information, personal profiles and information" (having a first use date of June 1, 2000), filed on November 5, 2003 and registered on October 25, 2005.
47. For example, eBay placed or caused to be placed misleading advertisements on the Google.com website, and on the websites of Google's partners and affiliates. This was a deliberate effort by eBay to deceive internet users seeking craigslist, and to instead misdirect them to Kijiji and eBay websites. Many of these advertisements featured blue underlined headlines such as the "Craigslist.org," "Craigslist.Com," or "www.Craigslist.Org" web addresses as follows:
48. Blue underlined text strings such as these are globally recognized on the internet as "hyper-links," wherein the text of the link describes the destination to which users will be taken if they click upon the link. Likewise, "Craigslist.org," "Craigslist.Com," and "www.Craigslist.Org" are examples of Uniform Resource Locators (URLs) - the universal format for specifying a web address where a specific web site may be found. However, eBay purposefully and deceptively programmed the hyper-linked craigslist URLs in the above-referenced ads so that users who clicked on them would not be taken to craigslist.org or craigslist.com as represented. Instead, eBay programmed the "Craigslist.org," "Craigslist.Com," and "www.Craigslist.Org" hyperlinked craigslist URLs to misdirect users instead to eBay's own Kijiji.com, eBay.com, and eBay.ca websites. Through this subterfuge, eBay created confusion in the marketplace and unlawfully misdirected users seeking craigslist to eBay's Kijiji and eBay domains. eBay's actions were particularly harmful to craigslist, since the company prides itself on not advertising, and eBay's actions thus further harmed craigslist's reputation. Consumers were not only confused but, by falsely designating eBay's inferior websites, eBay also diluted the CRAIGSLIST mark and name.Craigslist.org 100% Free local classifieds site! Compare Kijiji & Craigslist.org. www.Kijiji.com Craigslist.Com 100% Free local classifieds site! Compare Kijiji & Craigslist.Com. www.Kijiji.com Craigslist.org Browse a huge selection now. Find exactly what you want today. www.ebay.com www.Craigslist.Org Vast Selection at Affordable Prices Deal with Canadians and Save Money www.ebay.ca Craigslist.org Browse a huge selection now. Find exactly what you want today.
VI. CLAIMS FOR RELIEF
FIRST CLAIM
[Unlawful and Unfair Competition Under Cal. Bus. & Prof. Code § 17200 et seq. - Against All Defendants]
49. Plaintiff hereby realleges and incorporates by reference the allegations of paragraphs 1 through 48 of this Complaint as if fully set forth herein.
51. The acts and conduct of eBay as alleged above, and as alleged below at paragraphs 71 through 77, in this Complaint constitute trademark infringement and/or unfair competition under the common law of the State of California, and as a result they constitute an unlawful business practice in violation of Cal. Bus. & Prof. Code § 17200.
52. The acts and conduct of eBay as alleged above, and as alleged below at paragraphs 78 through 85, in this Complaint constitute unlawful passing off and/or unfair competition under the common law of the State of California, and as a result they constitute an unlawful business practice in violation of Cal. Bus. & Prof. Code § 17200.
53. The acts and conduct of eBay as alleged above, and alleged below at paragraphs 86 through 91, in this Complaint are violations of California Business & Professions Code § 14200 et seq., and as a result they constitute an unlawful business practice in violation of Cal. Bus. & Prof. Code § 17200.
54. The acts and conduct of eBay as alleged above, and alleged below at paragraphs 92 through 101, in this Complaint, constitute violations of California and Delaware law, including a breach of a director's fiduciary duty as set forth in Corporations Code § 309(a), and they give rise to liability pursuant to Corporations Code § 2116. As a result, these acts and conduct constitute an unlawful business practice in violation of Cal. Bus. & Prof. Code § 17200.
55. eBay's acts of unlawful competition have caused harm to competition, to consumers, and to its competitors. eBay's acts of unlawful competition have proximately caused craigslist to suffer injury in fact and loss of money and/or property (including as a result of expenses that craigslist has incurred, and continues to incur, in its efforts to prevent and deter eBay from engaging in anticompetitive conduct) in an amount to be proven at trial. eBay's acts of unlawful competition also have caused irreparable and incalculable injury to craigslist, to its shareholders, to the CRAIGSLIST Mark and trade name and to the business and goodwill represented thereby, and unless enjoined, could cause further irreparable and incalculable injury, whereby craigslist has no adequate remedy at law.
56. The acts and conduct of eBay as alleged above in this Complaint constitute unlawful, unfair, and/or fraudulent business acts or practices as defined by California Bus. & Prof. Code § 17200 et seq.
58. The acts and conduct of eBay as alleged above in this Complaint, including as alleged below at paragraphs 59 through 61, have significantly harmed, and significantly threaten to harm, competition in the relevant market, that being the Online Job Listing Market or a broader market (hereinafter "Relevant Market"). These acts and conduct constitute unfair competition in violation of Cal. Bus. & Prof. Code § 17200.
59. eBay's acquisition and subsequent holding of craigslist stock, in combination with eBay's acts and conduct as alleged in this Complaint, is a use of such stock ownership to bring about, or attempt to bring about, a substantial lessening of competition. These actions significantly and/or incipiently harm and threaten competition in the Relevant Market, and the anti-competitive effect of these acts has caused craigslist injury. These acts and conduct have had (and, if not stopped, will likely have) the effect or incipient effect of substantially lessening competition in the Relevant Market. They have caused (and, if not stopped, will likely cause) substantial injury to both consumers and competitors. eBay's acts and conduct amount to unfair competitive practices; they are against public policy because of their dangerous tendency unduly to hinder competition; and they lessen fair competition through predatory, restrictive, deceitful and/or otherwise oppressive conduct. Upon information and belief, these practices are motivated by an anticompetitive intent or purpose, and not by any legitimate independent business reason. The acts and conduct conflict with the policy and spirit of the antitrust laws, including Section 7 of the Clayton Act (15 U.S.C. § 18); and their effects are comparable to those caused by a violation of the antitrust laws. As a result they constitute an unfair business practice in violation of Cal. Bus. & Prof. Code § 17200.
60. eBay, through its agents, currently operates the Kijiji.com website, which directly competes with craigslist in the Relevant Market, such that the elimination of competition by any agreement between eBay and craigslist would constitute a violation of the antitrust laws. Nonetheless, eBay has had its agents serve as voting directors on the board of craigslist and, even after it started directly competing with craigslist, eBay attempted to place an eBay agent on the craigslist board. eBay is thus seeking to have its agents simultaneously serve on the boards of eBay and craigslist-two corporations that are engaged in commerce and are competitors-and this joint representation has competitive significance in the Relevant Market. The adverse effects on competition would be exacerbated by eBay's access to craigslist's proprietary information through its agent, and the agent's ability to participate in discussions and voting held by the craigslist board. These acts and conduct, coupled with the acts and conduct alleged above in this Complaint, have had (and, if not stopped, will likely have) the effect or the incipient effect of substantially lessening competition in the Relevant Market. They have caused (and, if not stopped, will likely cause) substantial injury to consumers, competitors, and others. eBay's acts and conduct amount to unfair competitive practices; they are against public policy because of their dangerous tendency to unduly hinder competition; and they lessen fair competition through predatory, restrictive, deceitful and/or otherwise oppressive conduct. Upon information and belief, these practices are motivated by an anticompetitive intent or purpose, and not by any legitimate independent business reason. The acts and conduct conflict with the policy and spirit of the antitrust laws, including Section 8 of the Clayton Act (15 U.S.C. § 19); and their effects are comparable to those caused by a violation of the antitrust laws. As a result they constitute an unfair business practice in violation of Cal. Bus. & Prof. Code § 17200.
61. eBay has, through its agents, served as a voting director on the board of craigslist even while eBay was preparing to compete with craigslist, and eBay has attempted even after it started directly competing with craigslist to place an eBay agent on the craigslist board. As a director, eBay has gained and would continue to gain access to sensitive financial and other competitive information relating to craigslist and its business activities. eBay is also a shareholder of craigslist with access to craigslist's confidential financial and other competitive information. As a shareholder, eBay has made inappropriate requests for such information and, upon information and belief, has misused this information for anticompetitive ends. Allowing eBay future access to such information, as a director and/or shareholder, will more likely than not result in anticompetitive effects. These actions, as well as the other predatory, restrictive, deceitful and/or otherwise oppressive acts eBay has directed at craigslist, as alleged above in this Complaint, violate the policy and spirit of the antitrust laws, and they have effects comparable to those caused by a violation of those laws. These acts and conduct have had (and, if not stopped, will likely have) the effect of substantially lessening competition in the Relevant Market. They have caused (and, if not stopped, will likely cause) substantial injury to consumers, competitors, and others. eBay's acts and conduct amount to unfair competitive practices; they lessen fair competition; and they are against public policy because of their dangerous tendency unduly to hinder competition. Upon information and belief, these practices are motivated by an anticompetitive intent or purpose, and not by any legitimate independent business reason. As a result they constitute an unfair business practice in violation of Cal. Bus. & Prof. Code § 17200.
62. In engaging in the conduct alleged in this Complaint, including that referenced and/or incorporated in paragraphs 57 through 61 above, eBay has acted in a manner that is immoral, unethical, oppressive, and/or unscrupulous.
63. eBay's acts of unfair competition have caused harm to competition, to consumers, and to its competitors. eBay's acts of unfair competition have proximately caused craigslist to suffer injury in fact and loss of money and/or property (including as a result of expenses that craigslist has incurred, and continues to incur, in its efforts to prevent and deter eBay from engaging in anticompetitive conduct) in an amount to be proven at trial. eBay's acts of unfair competition also have caused irreparable and incalculable injury to craigslist, to its shareholders, to the CRAIGSLIST Mark and trade name and to the business and goodwill represented thereby, and unless enjoined, could cause further irreparable and incalculable injury, whereby craigslist has no adequate remedy at law.
64. The acts and conduct of eBay as alleged above in this Complaint constitute unlawful, unfair, and/or fraudulent business acts or practice as defined by California Bus. & Prof. Code § 17200 et seq.
SECOND CLAIM
[False Advertising Under California Bus. & Prof. Code § 17500 et seq. - Against All Defendants]
65. craigslist realleges and incorporates by this reference each and every allegation set forth in paragraphs 1 through 64, inclusive.
66. By engaging in the acts and conduct alleged above in this Complaint, eBay has, on information and belief, acted with the intent to sell, offer and/or induce the public to purchase, by statements in advertising media concerning eBay's goods and services which are untrue and misleading, and which eBay knows are untrue and misleading.
67. By the aforesaid acts, eBay has engaged in false advertising in violation of California Business and Professions Code § 17500, et seq., resulting in injury in fact and loss of money and/or property by craigslist in an amount to be proven at trial.
68. craigslist has been irreparably injured by reason of eBay's false advertising.
69. eBay proceeded with the aforesaid acts of false advertising deliberately and willfully and said acts have caused craigslist serious and irreparable injury.
70. craigslist is informed and believes, and on that basis alleges, that eBay's acts may also have resulted in substantial profits to eBay, to which eBay is not entitled.
THIRD CLAIM
[California Common Law Trademark Infringement and Unfair Competition - Against All Defendants]
71. craigslist realleges and incorporates by this reference each and every allegation set forth in paragraphs 1 through 70, inclusive.
72. craigslist has used the CRAIGSLIST mark and name in commerce by, among other things, displaying and affixing the mark and name and otherwise making the mark and name known to prospective purchasers in the ordinary course of business in a manner that associates the mark and name with craigslist's goods, services, and/or business, distinguishes craigslist's products and services from other products and services, has made the mark and name famous, and otherwise results in a protectable trademark right and name. The CRAIGSLIST mark and name distinguish craigslist's products and services from other products and services because the mark and name are inherently distinctive, and, in any event, they have acquired a "secondary meaning" in the Relevant Market.
73. eBay began using the CRAIGSLIST mark and name after craigslist had used them in commerce, after the mark and name had begun distinguishing craigslist's products and services from other products and services, after craigslist made the mark and name famous, and after craigslist had obtained a protectable trademark right in the mark and name.
74. eBay, without the consent of craigslist, used in commerce, the craigslist-owned CRAIGSLIST mark and name, and/or a designation confusingly similar to the CRAIGSLIST mark and name, in affiliation, connection, or association with eBay's goods or services in a manner that creates a likelihood of confusion, mistake and/or deception with the consuming public.
75. eBay's acts complained of herein constitute trademark infringement under the common law of the State of California.
76. eBay's acts complained of herein also constitute unfair competition under the common law of the State of California.
77. eBay's trademark infringement and unfair competition under the common law of California has damaged and will continue to damage craigslist's goodwill and reputation and has resulted in a loss of revenue to craigslist in an amount to be determined.
FOURTH CLAIM
[California Common Law Passing-Off and Unfair Competition - Against All Defendants]
78. craigslist realleges and incorporates by this reference each and every allegation set forth in paragraphs 1 through 77, inclusive.
79. eBay has, in connection with the marketing of goods or services, made representations relating to its own goods, services, and/or commercial activities that are likely to deceive or mislead prospective purchasers, to the commercial detriment of craigslist, by causing the mistaken belief that eBay is the agent, affiliate, or associate of craigslist and/or that the goods or services that eBay markets are produced, sponsored, or approved by craigslist.
80. The representations eBay made were unprivileged.
81. eBay's representations are likely to affect the conduct of prospective purchasers.
82. There is a reasonable basis for believing that eBay's representations have caused or are likely to cause a diversion of trade from craigslist and/or harm to craigslist's reputation and/or good will.
83. eBay's acts complained of herein constitute passing off under the common law of the State of California.
84. eBay's acts complained of herein also constitute unfair competition under the common law of the State of California.
85. eBay's passing off and unfair competition under the common law of California has damaged and will continue to damage craigslist's goodwill and reputation and has resulted in a loss of revenue to craigslist in an amount to be determined.
FIFTH CLAIM
[Dilution Under California Bus. & Prof. Code § 14200 et seq. - Against All Defendants]
86. craigslist realleges and incorporates by this reference each and every allegation set forth in paragraphs 1 through 85, inclusive.
87. The CRAIGSLIST mark and trade name are famous.
88. eBay made a commercial use of the CRAIGSLIST mark and name in commerce.
89. eBay began using the CRAIGSLIST mark and name after it was made famous by craigslist.
90. eBay's use of the CRAIGSLIST mark and name has eroded the quality of the CRAIGSLIST mark and name by diminishing craigslist's capacity to identify and distinguish its goods and services, and this use by eBay has caused and is likely to cause dilution of the CRAIGSLIST mark and name.
91. craigslist has been damaged by eBay's violation of California Bus. & Prof. Code § 14200 et seq.
SIXTH CLAIM
[Breach of Fiduciary Duty - Against All Defendants]
92. craigslist realleges and incorporates by this reference each and every allegation set forth in paragraphs 1 through 91, inclusive
93. eBay has, through its agents, served as a voting director on the board of craigslist even while eBay was preparing to compete with craigslist, and eBay has attempted even after it started directly competing with craigslist to place an eBay agent on the craigslist board.
94. eBay is a shareholder of craigslist with access to craigslist's confidential financial and other competitive information. As a shareholder, eBay has made inappropriate requests for competitive information and, upon information and belief, has misused this information for anticompetitive ends.
95. The acts and conduct of eBay as alleged above in this Complaint have been in bad faith and in derogation of its duties to craigslist.
96. eBay, through its agents, failed to perform the duties of a director in good faith.
97. eBay, through its agents, failed to perform the duties of a director in a manner believed to be in the best interests of craigslist and its shareholders.
98. eBay, through its agents, failed to perform the duties of a director with such care, including reasonable inquiry, as an ordinarily prudent person in a like position would use under similar circumstances. The conduct giving rise to these failures occurred in conjunction with eBay's breach of its duty of loyalty, and eBay engaged in this conduct in bad faith and with gross negligence.
99. Such acts and conduct, to the extent they involve craigslist Inc.'s predecessor-in-interest 1010 Cole Street, Inc., constitute violations of California law, including breach of a director's fiduciary duty owed by eBay as set forth in Corporations Code § 309(a). To the extent such acts and conduct involve craigslist, Inc., they constitute violations of Delaware law, including breach of a director's fiduciary duty owed by eBay under Delaware common law, and they give rise to liability pursuant to California Corporations Code § 2116.
100. eBay's violations of California and Delaware law and its breaches of fiduciary duty have caused craigslist to suffer injury in fact and loss of money and/or property (including as a result of expenses that craigslist has incurred, and continues to incur, in its efforts to prevent and deter eBay from engaging in its unlawful conduct) in an amount to be proven at trial. craigslist has suffered and continues to suffer irreparable and incalculable injury as a result of eBay's violations and breach.
101. In engaging in the conduct referenced and/or incorporated in paragraphs 92 through 100 above, on information and belief, eBay intended to cause injury to craigslist, to fair competition, and ultimately to the consumers of California. eBay's conduct, particularly insofar as it was carried out by a board member of craigslist owing fiduciary duties to the company, was despicable, and it was, on information and belief, carried out with a willful and conscious disregard of the rights of craigslist and California consumers. eBay has thus acted with malice under California law.
VII. PRAYER
WHEREFORE, craigslist respectfully requests judgment as follows:
(1) That the Court enter a judgment against eBay that it has:
(a) engaged in unfair and unlawful competition in violation of California Business & Professions Code § 17200 et seq.;
(b) committed and is committing acts of false advertising in violation of California Business & Professions Code § 17500 et seq.;
(c) willfully infringed the rights of craigslist in its CRAIGSLIST mark and name;
(d) engaged in passing off made illegal by the common law of the State of California;
(e) diluted craigslist's CRAIGSLIST mark and name;
(f) breached fiduciary duties to craigslist; and
(g) otherwise injured the business reputation and business of craigslist by its acts and conduct set forth in this Complaint.
(2) That the Court issue permanent injunctive relief against eBay, its officers, agents, representatives, servants, employees, attorneys, successors and assigns, and all others in active concert or participation with eBay, enjoining and restraining them from:
(a) using in any manner the CRAIGSLIST mark or name alone or in combination with any other words or symbols which so resemble the marks and name of craigslist as to be likely to cause confusion, deception or mistake, on or in connection with the advertising, offering for sale, or sale of any product or service which is not craigslist's or not authorized by craigslist to be sold in connection with each of said marks and name;
(b) using any trademark, trade name, logo, business name, domain name, computer address or other identifier or acting in any fashion which may be calculated to falsely represent that the goods and services provided, promoted or offered by eBay are sponsored by, authorized by, licensed by, or in any other way associated with craigslist;
(c) engaging in any other activity constituting an infringement of craigslist's mark or name or of craigslist's rights in, or right to use or to exploit said mark or name;
(d) doing or causing to be done any further acts in violation of California Business and Professions Code § 17200 et seq.;
(e) doing or causing to be done any further acts in violation of California Business and Professions Code § 17500 et seq.; and
(f) assisting, aiding, or abetting any other person or business entity in engaging in or performing any of the activities referred to in subparagraphs (a) through (e) above;
(3) That the Court order eBay to restore to craigslist all shares of the company owned by eBay which were acquired by means of, or for the purpose of, unfair competition; or, in the alternative, that the Court order eBay to divest its interests in craigslist since eBay's continued holding of craigslist stock, particularly in combination with the acts and conduct as alleged in this Complaint, is a use of such shareholding to bring about, or attempt to bring about, a substantial lessening of competition and otherwise significantly or incipiently threatens or harms competition;
(4) That the Court order eBay to pay craigslist's general, special, and actual and statutory damages as follows:
(a) craigslist's damages and eBay's profits;
(b) Such other damages as the Court shall deem to be just and equitable;
(c) Interest, including prejudgment interest, on the foregoing sums;
(5) That, on account of eBay's malicious conduct, the Court order eBay to pay punitive damages;
(6) That the Court order eBay to pay to craigslist both the costs of this action and the reasonable attorneys' fees incurred by it in prosecuting this action; and
(7) That the Court grant to craigslist such other and additional relief as is just and proper.
VIII. JURY DEMAND
craigslist requests this case be tried to a jury on all issues triable by a jury.
DATED: May 14, 2008
Perkins Coie LLP
By: /s/ David T. Biderman David P. Chiappetta Jason A. Yurasek Attorneys for Plaintiff craigslist, Inc.