A message on the company's Web site said Bidland is "indefinitely suspending operations" May 13.
The auction technology site sued Telefonica for breach of contract in December, seeking $500 million, after the failed attempt to partner with Telefonica and its American subsidiary.
In the lawsuit filed in California Superior Court in San Diego, Bidland accused Telefonica of promising a joint venture to gain complete access to Bidland's auction and e-commerce technology and marketing plans--then abruptly calling off the deal and using that information to start its own Web site, Katalyx.com, in November.
An outgoing phone message at the San Diego-based company said that "due to working capital concerns, Bidland Systems is indefinitely suspending operations, pending the outcome of a lawsuit commenced against a third party. At this time, Bidland has no full-time employees."
In December, Bidland Chief Executive Doug Augustine said the company intended to make sure that "Telefonica either completes the deal with Bidland or that Bidland receives the full compensation and benefits to which it is entitled."
In March 2000, Bidland completed a third round of funding for $15 million, bringing its total funding to $22 million.
San Diego-based Bidland Systems provides auction technology designed to be used by business-to-business portals, application service providers, Web hosting companies and consumer portals. Among Bidland's clients listed on its Web site are NBC, MTV, Gadget Universe, Digiweb, eTravnet.com and the San Diego Padres.