New Zealand Post's new directories business Localist is suing Yellow Pages Group over allegations Yellow breached the Fair Trading Act by buying up similar web addresses and Google adwords in a deliberate attempt to divert online searches from Localist to itself.
But Yellow chief executive Bruce Cotterill believes the move is a publicity stunt.
Localist yesterday filed a lawsuit against Yellow Pages Group in the High Court at Auckland.
Former Kiwibank chief executive and Localist chairman Sam Knowles said it was with great reluctance that Localist was taking the matter to court.
Knowles said he had first been made aware of the issue last November when he was told by his executive team the Yellow Pages Group had bought a range of internet domain names which were almost identical to the Localist internet address. The addresses include www.locallists.co.nz and www.localists.co.nz.
"Those domain names were directing traffic to a web page promoting the Yellow Pages and YPG's other directory services," Knowles alleges in an affidavit.
Localist also alleges that Yellow paid to have its website appear at the top of Google searches of the word "localist".
Knowles said he and New Zealand Post chief executive Brian Roche met Cotterill on November 10 to talk about Yellow's "unauthorised possession and use of Localist's trademark".
Knowles said Cotterill had said he had no knowledge of the so-called "cyber-squatting" but would investigate.
Localist's lawyers followed up the meeting with a letter on November 19 requesting that Yellow "relinquish the adword and transfer the domain names to a New Zealand Post nominee".
But Knowles said Cotterill and Yellow had completely "ignored our good faith efforts to resolve the matter on commercial terms".
Knowles said that when he ran Kiwibank he was involved in competition with the Australian banks which he considered "hard but fair".
"To my mind it is beyond the pale to snatch at a start-up company's trademark and to take steps to damage its goodwill as a spoiling tactic ahead of its entry into the market."
Yellow Pages' Cotterill said he had only received the legal documents late yesterday and would be giving them to his lawyers.
"I haven't read the documents ... they are about an inch and a half thick."
Because the media had been alerted to the legal documents it appeared to be a "bit of a publicity stunt", he said.
However if there was a "reasonable" legal case he would take it seriously.
Last month Yellow Pages said its business would be sold into a new corporate framework that would see its bankers write off $1.05 billion of debt, valuing the new company at $750 million.