Yahoo Decision Has Commerce Implications

While civil libertarians hail as a free speech victory the ruling by a federal judge that Yahoo does not have to comply with a French order to keep its citizens from viewing Nazi-related content on Yahoo's site, the ruling has important commerce implications as well.

U.S. District Judge Jeremy Fogel ruled that the First Amendment protects content generated in the United States by American companies from being regulated by authorities in countries that have more restrictive laws on freedom of expression.

“There are two issues here: one's a free speech issue, and the other's a jurisdiction issue,” said Marc Roth, an attorney at Brown Raysman Millstein Felder & Steiner, LLP in New York, who specializes in Internet marketing issues. “It appears that the U.S. court's position is you can't have one jurisdiction dictate for the entire world what's acceptable on the Internet. If you're a U.S.-based Web site, you're subject to U.S. law.”

While passive U.S.-generated and based site content has been deemed out of foreign courts' jurisdiction, outbound marketing efforts still may fall under the law of the land into which it is sent.

“If you are promoting your auction to French residents in an e-mail, that may be a different story,” Roth said. “That's not passive on your Web site. That's making affirmative efforts into another jurisdiction.”

Companies also must consider what assets they have in foreign jurisdictions when deciding whether to comply with their laws on their Web sites.

“If you do [have assets there], you risk those assets being held by the court in that jurisdiction,” Roth said.

France's Union of Jewish Students and the International Anti-Racism and Anti-Semitism League sued Yahoo last year for allowing swastika flags and other Nazi collectibles to be auctioned on its site.

A French judge ordered Yahoo to prevent French users from accessing Nazi-related material. Yahoo then banned hate-related items from its auction pages.

In May, eBay Inc. also banned the sale of Nazi items on its pages.

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