Back in April, eBay (NASDAQ: EBAY), which owns 28.4% of Craiglist, sued the company alleging that its board of directors (which consists only of founder Craig Newmark and CEO Jim Buckmaster) had attempted to dilute eBay's stake to just 10%.

Well, Craigslist wasn't having any of that. It filed a lawsuit accusing the company of interfering with its business operations, unfair competition by using its proprietary information, and infringing its trademark to attract visitors to eBay Web sites. The suit was filed yesterday in California Superior Court in San Francisco.

eBay responded by saying that, "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." (For a detailed discussion of the lawsuit check out this post from Fine on Media.)

The legal issues aside, Craigslist is likely to win the battle for hearts and minds in this one -- mainly because the site performs a wonderful public service as a free online classified site. eBay, on the other hand, has earned the ire of its sellers with never-ending increases in fees. This is one David vs. Goliath battle that I look forward to watching unfold.