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A U.S. District Court judge on Wednesday dismissed a case against Yahoo by French organizations that sought to penalize the company for allowing Nazi-oriented auction items and Internet links on its U.S. Web portal.

Yahoo cannot be forced to comply with French laws against the expression of pro-Nazi and anti-Semitic views, because doing so would violate its right to free expression under the First Amendment of the U.S. Constitution, writes Judge Jeremy Fogel of the U.S. District Court for the Northern District of California, in an order of summary judgment.

The case raised questions about which laws may govern how individuals and companies can use the Internet. Laws on issues such as obscenity, gambling, and political speech differ from country to country, but Internet content and services can be accessed anywhere in the world unless a particular government filters them.

Yahoo welcomes the judgment.

"Judge Fogel's ruling ensures that content made available on U.S. Web sites will be protected by the First Amendment regardless of where that content may be accessed. It does not need to comply with a patchwork of content restrictions devised by over 200 nations," Mary Catherine Wirth, Yahoo's international senior corporate counsel, says in a prepared statement.

Yahoo representatives could not be reached for further comment.

Yahoo will not amend its policy regarding "hate-related materials" on its Yahoo Auctions site, according to the statement.

Violating Various Laws

The suit, introduced last year by the League Against Racism and Anti-Semitism and other French groups, charged that Yahoo was violating various French laws, including laws against selling Nazi memorabilia and denying the existence of the Holocaust.

Ruling on the suit in May 2000, a French judge ordered Yahoo to find a way to prevent users in France from seeing the materials, and the ruling was upheld in France in November 2000. According to French law, Yahoo could have been fined 100,000 French francs--about $13,600--for each day it continued to make the content accessible in France.

Yahoo argued it could not shield French users of the U.S.-based Yahoo site from the offensive content without removing it altogether. The Yahoo France Web site has always complied with French law, Yahoo told the court.

In January, Yahoo changed its auction policy and banned the sale of hate-related merchandise, including Nazi memorabilia but not books, magazines, or films. As a result, it was still in violation of French law.

The ruling breaks new ground in international commerce and the Web, according to Yankee Group online services analyst Rob Lancaster. U.S. judges in the past have made rulings regarding what companies based outside the U.S. should be able to offer online in this country, but not on what U.S. Web companies can provide around the world, he says.

International Internet

Foreign governments are unlikely to feel bound by the ruling, but it may increase U.S.-based Internet companies' awareness of international issues--possibly with an effect opposite to the direction of the ruling, Lancaster says.

"I hope it's taken seriously, and I hope it drives organizations to consider these things more seriously, because they're going to come up again in the future," Lancaster says. "These kinds of organizations have to be sensitive to the laws of foreign countries."

Ultimately, whether a company acts to comply with a given government's standards by restricting its offerings is an issue of business ethics, he says.

However, Lancaster believes an international body such as the World Wide Web Consortium should come up with some overall standard to cover these disputes.

"Some standards that are specific to the Internet need to be put in place for cases like this. An organization that's based on the Internet and understands the properties of the Web ... should be the one to set the standards for major Web-based organizations [such as Yahoo] to follow," Lancaster says.

Such a group could decide whether Web sites that sell goods worldwide should be responsible for complying with local codes and regulations, he says.

As it stands, controls on what is available for sale on the Internet can only be imposed through filtering of Internet traffic by a particular country, he adds.