In what could be a victory for both Yahoo! and free speech activists in the United States, the 9th Circuit Court of Appeals has decided to rehear arguments in a lawsuit leveled against Yahoo! by two French human rights groups. The lawsuit, originally filed in French courts in 2000, was designed to halt the sale of Nazi memorabilia on Yahoo!'s auction site. The sale of any Nazi related items is against French law. France's Union of Jewish Students and the International Anti-Racism and Anti-Semitism League are working to ban the sale of Nazi memorabilia on any Web site accessible in France.

The original French case resulted in a court order requiring Yahoo! to block all Nazi-related auctions from French Internet users. Yahoo! complied by removing content from its French site, However, Yahoo! continued to allow the sale of such items on its U.S. based .com domain. Although French internet connections automatically default to the .fr version of the domain, Internet users anywhere in the world can choose to directly access the .com version, and thus, the Nazi items that the French court ordered banned.

Since French surfers could still access the banned items, French courts issued a fine of over $13,000US per day against Yahoo! starting in February of 2001. Yahoo! filed suit in U.S. District Court in 2002 on the grounds that the French ruling violated the United State's First Amendment's free speech clause. However San Jose, California based District Court Judge Jeremy Fogel ruled that Yahoo! had to assume the risks that it might violate international laws if it wished to do business on the Internet. That ruling was reversed this past August by the Ninth Circuit Court of Appeals on the grounds that Fogel had no authority over the case.

This week, that same court stated that it would rehear some of the arguments in the five year old case, sparking Yahoo!'s legal counsel to claim victory. "If American companies have to worry that foreign judgments entered against them might be enforceable, it could end up with companies censoring their Web sites," said Mary Catherine Wirth, senior corporate council at Yahoo and a professor at University of California Hastings College of The Law. The new hearing could ultimately result in a victory for either side, but legal specialists claim that decisions to revisit cases are rare and usually only happen if there's likely to be a change in the ruling.

The idea of placing a business off-shore in order to avoid U.S. based laws is not a new one. E-mail spammers are notorious for using access providers in the former Soviet Union and China in order to avoid falling under U.S. law. The adult industry also often chooses to host their sites in foreign countries where pornography laws are not as strict.

The ultimate outcome of the case may serve to have a significant impact on the way that U.S. based companies do business on the Web. Since Web sites are accessible from almost anyplace that has an Internet connection, U.S. based businesses could find themselves in the nearly impossible situation of trying to comply with every International law. Small home-based businesses that put up Web sites to legally sell items in one country may find themselves facing costly lawsuits in countries that they can't even afford to travel to, let alone present a legal defense in. A ruling in favor of the French courts would realistically force all Internet companies to bow to the strictest laws regarding content in the world in order to avoid breaking any laws.

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February 11, 2005

Jennifer Laycock is the Editor of Search Engine Guide, the Social Media Faculty Chair for MarketMotive and offers small business social media strategy & consulting. Jennifer enjoys the challenge of finding unique and creative ways to connect with consumers without spending a fortune in marketing dollars. Though she now prefers to work with small businesses, Jennifer’s clients have included companies like Verizon, American Greetings and Highlights for Children.

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