The dispute stems from a new AuctionWatch.com service, universal search, which is designed to find items available for auction across many of the leading sites such as eBay (EBAY), Amazon (AMZN) and Yahoo! (YHOO) from the AuctionWatch site.

After its launch in October, eBay sent a formal complaint to the company, alleging that the service was an "unauthorized intrusion" and that it places an unnecessary load on eBay servers, is a violation of their intellectual property rights and misleads users by not returning the full results of some eBay searches.

Unable to reach a compromise on the issue, eBay Wednesday informed AuctionWatch of its intention to block AuctionWatch from reaching its site. As a result, as of Thursday users of the Universal Search can no longer reach any eBay auctions.

"We are extremely disappointed that eBay has decided to build a wall around their marketplace and put their own interests ahead of their customers and of the Internet at large," said Rodrigo Sales, CEO of AuctionWatch.com.

"We view their actions as anti-consumer and in violation of the spirit of the Internet. We are exploring legal, technical and business options and plan to vigorously defend our right to conduct our business by offering users the universal services they are requesting."

eBay could not be reached for comment.