The spat between eBay and Craigslist has been going on for years and has just taken another turn with reports that the Department of Justice in U.S district court in San Jose has issued a grand jury subpoena. The subpoena is asking for information on several current and former top-level eBay executives, including Pierre Omidyar the founder of eBay and Josh Silverman who once sat on the Craiglist board.
The argument goes back years to 2005 when Craigslist accused eBay of obtaining confidential information through their board representatives which was then used by eBay when launching their Craigslist competitor then known as Kijiji. Kijiji is now known as eBay Classifieds.
A year ago (following the attempt by Craigslist to dilute eBay’s shares in Craigslist) eBay won back their holding in the company when a Delaware judge restored eBay’s 28.4% ownership of Craigslist.
eBay said of the news today “We will cooperate with any inquiry related to the disputes between eBay and Craigslist. eBay believes that Craigslist’s allegations against eBay are without merit.”
With or without merit it’s doubtful that Craigslist will ever leave eBay alone, although after so many years of court proceedings it’s hard to see what resolution would make them happy. Certainly eBay appear to have no intention of relinquishing their share holding in Craigslist.
The only real update in today’s news is that it turns what was hitherto a civil argument into a possible criminal case. However that’s assuming that the grand jury decide that there’s enough evidence for indictments and for the case to go to trial.
As you said in your previous article (to which you linked) when the Chancery Court in Delaware slapped Craigslist for trying to dilute eBay’s shares, they affirmed Craigslist’s right to stagger Director appointments; thus eBay effectively lost the right to unilaterally elect a Director to Craigslist’s Board.
eBay admitted to using Craigslist’s confidential and proprietary information obtained by its Directors and to scraping the site to assist in the development of Kijiji which was intended to compete with Craigslist.
The Uniform Trade Secrets Act as adopted by the State of California prohibits the misappropriation of a company’s trade secrets and provides a number of potential remedies for actual or threatened misappropriations of trade secrets. The Act defines a “trade secret” as “information, including a formula, pattern compilation, program, device, method, technique, or process, that is both of the following:
Derives independent economic value, actual or potential from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use.
Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy”
Using a Federal Grand Jury for a civil case is a crime. Without actually seeing the subpoena, it is likely the Prosecutor is looking at criminal violations of the Federal Economic Espionage Act, 18 U.S.C.A. There may be interstate commerce implications too.
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