Yahoo! Forced To Bar French from Nazi Auctions

A French judge on Monday gave Yahoo! (Nasdaq: YHOO) until July 24th to “make it impossible” for residents of France to access auctions of Nazi paraphernalia through the Web giant’s U.S. auction site.

The International League against Racism and Anti-Semitism (LICRA) and the Union of French Jewish Students (UEJF) took Yahoo! to court in April, charging the Santa Clara, California-based company with illegally hosting auctions of Nazi-related paraphernalia. Selling or displaying any items that incite racism, including Nazi artifacts, is strictly illegal in France, and no such items are offered on Yahoo!’s French auction site.

Judge Jean-Jacques Gomez’s decision marks the first time that a French judge has imposed a restriction on a foreign Internet company. Yahoo! was also ordered to pay court costs of $1,390 (US$) to both LICRA and UEJF.

LICRA has asked that Yahoo! be fined $96,000 for each day it fails to comply with French law.

Offensive Items

In issuing his ruling, Gomez said the auctions of Nazi items are “an offense to the collective memory of the country.”

Further inflaming passions, LICRA attorney Stephane Lilti told the court last week that “Yahoo! is an ally of revisionists and contributes to their propaganda.” Yahoo! declared Monday that it “condemns all forms of racism.”

According to Yahoo! attorney Christophe Pecnard, “The real question put before this court is whether a French jurisdiction can make a decision on the English content of an American site, run by an American company for the sole reason that French users have access via the Internet.”

Pecnard pointed out that “An identical stand by judges in foreign countries would oblige French operators of Internet sites to comply with the laws of more than 100 countries.”

LICRA attorney Marc Levy said the judge had “rendered a service to the Internet,” which Levy said ran the risk of becoming a “no-law zone.”

Technologically Impossible

Legal issues aside, the case raises the question of whether it is technologically possible for Yahoo! to comply with the judge’s order. Lawyers for the Internet powerhouse have said all along that it would be impossible to block French access to the U.S. auction site where thousands of items of Nazi memorabilia are legally offered for sale each day.

Yahoo! has several options, which range from banning the sale of Nazi paraphernalia completely — even from countries where those sales are legal — to shutting its doors to French users.

Placing a complete ban on the sale of Nazi paraphernalia puts Yahoo! in the role of censor and would require the company to evaluate every item put up for sale through Yahoo! auctions — amounting to thousands of items a day.

Banning French users would not be easier, because while the company may be able to lock out users from French-based Internet service providers (ISPs), there is little the company can do to stop French users from using a foreign ISP to access Yahoo! auctions.

Different Legal Standards

The case spotlights one of the biggest legal pitfalls waiting for companies doing business in the borderless world of cyberspace: complying with the laws of the countries where a business is physically located may not be enough to prevent litigation and adverse judgments.

The lesson Yahoo! learned this week is that its terms of service — which clearly state the company is not responsible for items listed for sale through Yahoo! Auctions and prohibits the sale of items that are “illegal to sell under any applicable law, statute, ordinance or regulation” — are not enough to shield it from court orders around the world.

America Online learned a similar lesson in April when a German judge ruled that AOL Germany was liable for copyright infringement because the company did not take action to prevent its users from swapping copyrighted music files. If the suit had been brought in the U.S., AOL could have sought protection under the “safe harbor” provision of the Digital Millennium Copyright Act, (DMCA) which provides that ISPs are mere conduits for information.

Summing up the implications of this case, Pecnard said, “Such a functioning of the justice system at international level constitutes a risk to the development of the Internet in France and the rest of the world.”