Is Craigslist the victim of a witch-hunt?

In the aftermath of a horrible murder by someone who is now routinely referred to as “the Craigslist killer,” the online classified site has been coming under increasing pressure from both the government — which has been waging a prostitution-related crusade for some time now — and others who see the service as somehow complicit in these kinds of crimes. Venture capitalist and blogger Jeff Nolan, for example, says in a recent post that Craigslist “has a problem” and should find some way to deal with it, and suggests that both founder Craig Newmark and CEO Jim Buckmaster don’t seem to care much, or want to do anything about it.

“Instead of waiting for a community solution to a problem that will only get worse, Newmark and Buckmaster should be taking a leadership position and driving effective change to combat crime taking place on Craigslist.”

Jeff seems like a smart guy, but I couldn’t disagree more with his post. As far as I can tell, Craigslist has been doing everything it can to remove posts that are linked to criminal behaviour, whether prostitution or anything else, and they appear to have bent over backwards to co-operate with the attorneys-general from a number of states when it comes to imposing fines on wrong-doers and other strategies for limiting that kind of behaviour. What more could they possibly do — turn over their server log files to the authorities? Let Craigslist become an arm of the government?

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Craigslist returns fire in eBay suit

After being hit with an eBay legal missile last month, Craigslist has responded with a projectile of its own: the company has filed a countersuit accusing the online auction company — which owns a 25-per-cent stake in Craigslist — 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.” According to the blog post by CEO Jim Buckmaster:

“We respectfully ask the Superior Court in San Francisco to enjoin this conduct and order eBay to (1) make full restitution to craigslist, (2) disgorge their related profits (3) restore to craigslist all shares of the company acquired by means of, or for the purpose of unfair competition, and (4) pay punitive damages for their malicious behavior.”

As you may recall, eBay sued Craigslist last month alleging a variety of behaviour on the part of co-founders — and controlling shareholders — Craig Newmark and Jim Buckmaster, including the issuance of shares that diluted eBay’s stake below the 25-per-cent mark, as well as the creation of an even more dilutive “shareholder rights” agreement, otherwise known as a “poison pill” that had the effect of making it impossible for eBay to sell its stake to anyone other than Craig and/or Jim. Craigslist later made the statement public.

They’ve now done the same thing with their countersuit by posting the entire thing online. Among other things, the suit alleges that eBay tried twice to put executives from its Kijiji unit — which now competes head-to-head with Craigslist in the U.S. — on the board of the classified site. The lawsuit also says that 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,” which appears to involve the buying of Google ads that linked to the eBay site but used Craigslist’s name.

The bulk of the suit seems concerned with what Craigslist says is eBay’s desire to gain access to “proprietary competitive information” to help Kijiji. My friend and fellow mesh organizer Rob Hyndman, a lawyer who specializes in technology startups, says that the lawsuit seems to be an attempt by Craigslist to “accomplish by litigation what it failed to accomplish by business planning and sensible precautions.”

eBay and Craigslist: A fox in the henhouse

A week or so ago, eBay filed a lawsuit against Craigslist, alleging that the controlling shareholders of the classified site — namely, founder Craig Newmark and CEO Jim Buckmaster — had taken certain steps to dilute the auction provider’s minority stake in the company, and thereby had breached their fiduciary duty and injured eBay as a shareholder. Craigslist has now made the statement of claim public, and it reads like a corporate version of a divorce court filing. These two parties are married, but they really don’t want to be, and each one is trying its hardest to get out of the relationship without losing everything.

According to the statement (which obviously has only one side of the story) eBay says that Craig and Jim got mad when Kijiji — the eBay subsidiary that competes with Craigslist — started up operations in the United States, so they took a number of steps to dilute the company’s stake below 25 per cent (including issuing themselves a bunch of shares), and thereby removed a bunch of rights that eBay had as a shareholder. They also, according to eBay, instituted a “poison pill” that threatened to flood the place with cheap stock.

In other words, they did (or are alleged to have done) pretty much what Valleywag and others, including yours truly, thought they did when the lawsuit first emerged. Of course, what eBay is talking about isn’t really a poison pill — pills are typically designed to prevent hostile takeovers, but no one can take over Craigslist because Jim and Craig control it. This pill isn’t so much designed to prevent someone from buying as it is designed to prevent someone (namely eBay) from selling.

Can Craigslist do that? Obviously eBay is arguing that it can’t. And while you might think that the classified site is a private company and so Craig and Jim can do whatever they like, it’s not quite that simple. Ebay does have rights as a minority shareholder — and it argues that even if it did engage in competitive activity, the clause it triggered did not give Craig and Jim the right to prevent eBay from selling its stock to anyone but them. This could get ugly.

Craigslist vs. craigslist blogger, round three

The blogger that Craigslist sent a cease-and-desist letter to earlier this week isn’t going to back down quietly, it seems. He has published a response on craigslistblog.org to Jim Buckmaster’s recent post, in which he says that the ads were just to “cover some hosting costs.” He also says that with his misleading post, the Craigslist CEO has “tarnished Craig Newmark’s reputation forever,” and that Buckmaster should “do the right thing and step down today.” Gee, Tim — hyperbole much? (this post has since been removed, I presume as a result of legal counsel).

My earlier post on it and update follow:

Update:

Craigslist CEO Jim Buckmaster has posted an entry to the new Craigslist blog in which he apologizes for the “ham-handed” C&D letter described below, which the site sent to a blog called Craigslistblog.org. But Buckmaster also provides some more details about why the classified service went after Tim White’s blog; among other things, he says the blog was running misleading text ads with Craigslist’s name in them (the ads were apparently removed from the site before the blog post got a lot of attention).

To me, that changes things substantially. One of the principles behind domain-squatting cases is that in order to avoid such accusations, a domain should have been registered and used in good faith — in other words, not to generate revenue based on the potential misunderstanding generated by a similar domain name. It seems pretty clear that Craigslistblog.org was designed to do that, and so I am backing Craigslist on this one. Jim Buckmaster’s post, incidentally, is a nice example of how to apologize and still make your point.

Original post:

Seems like Craigslist is in some hot water over a blog. But not because its new official blog is really ugly, poorly-designed and difficult to use, which it is — although given the somewhat… er, “distinctive” look and feel of the classified site itself, it’s probably not surprising that the blog looks like my daughter’s fifth-grade class designed it using a version of Microsoft’s FrontPage from 1998 (Craigslist doesn’t have ads? Not to be outdone, the blog doesn’t have comments or an RSS feed).

In any case, it’s not Craigslist’s official blog that’s the issue — it’s a site called Craigslistblog.org, which was started up about a month ago by a guy named Tim White as a way of getting some discussion going about Craigslist, both good and bad. Then he got a rather brusque C&D letter from none other than Craigslist CEO Jim Buckmaster, which Tim has posted on his site. In no uncertain terms, it directs Tim to stop using the domain and the name Craigslist immediately or face legal action.

Tim,

We need you to stop using the infringing domain CRAIGSLISTBLOG.ORG immediately, and arrange for tranfer of it to us asap – using/selling/transfering infringing domains is illegal, and penalties up to $100,000 per domain can be applied.

Tim, however, responds that Jim has “gotten some bad legal counsel” and asks whether the company plans to shut down other sites with craigslist in the name, such as craigslistmap.info. Jim then copies Tim on a letter to Craigslist’s attorneys, in which he not-so-subtly mentions that the law firm does intellectual property work for “Google and a lot of other prominent companies.” As far as I can tell, Tim isn’t planning to back down.

Is Craigslist in the right here? I’m not a lawyer (although I sometimes play one on TV), but from my reading of past cases involving domain disputes, both WIPO rules and U.S. law require complainants to satisfy several conditions in order to win such a case. The first one — whether the domain name is confusingly similar — is a slam dunk for sure. But the other criteria are whether the defendant is making legitimate fair use of the name, and whether it was registered in bad faith (i.e. whether the defendant registered it with intent to profit from the confusion).

Those last two are a lot harder to answer, and I happen to think Tim has a pretty good case. Whether he can withstand a legal onslaught from Craigslist — which has about $60-million or so a year to play around with, as far as I can tell from the recent revenue numbers — is a separate question. It’s also interesting to note the anti-Craigslist comments on Tim’s post. I expect plenty of criticism of the classified site based on the contrast between its touchy-feely ethos and its actions.

Why is it different because it’s Craigslist?

So another ad on Craigslist has resulted in a man’s house being ransacked and many of his belongings — including his horse and his porch swing — being stolen. Robert Salisbury of Jacksonville, Oregon apparently came home to find people rummaging through his home, after an ad on Craigslist said that he was giving away his possessions. The ad, of course, was a hoax — just like the one that ran about a year ago that resulted in a woman’s house being vandalized. In that case, they even took the woman’s refrigerator, the kitchen sink and the front door.

As Mike Arrington notes in his post at TechCrunch, this shouldn’t be that surprising really. Craigslist is simply a mirror that reflects human behaviour at its best and possibly at its worst. Why does that have anything to do with the site itself? If someone arranges for a hitman to take out their spouse, and the medium of communication happens to be a newspaper ad, should the newspaper be liable? Hardly. If I call someone and arrange a bank robbery, is the phone company to blame for that?

Craigslist is simply an instrument. Obviously, if it publishes an ad that it knows to be fake or illegal — like the listings on eBay for human kidneys and so on — then it is potentially at fault. But it has no way of knowing whether Robert Salisbury of Jacksonville actually wants to give away all of his possessions, nor should it be expected to.