Barriers Put Brakes on Global E-Sales

A French court this week ordered Yahoo Inc. to prohibit the sale of Nazi artifacts - items such as daggers, uniforms and badges - from its auction site to users in France. While the court said Santa Clara, Calif.-based Yahoo will face daily fines if it fails to comply, the enforceability of that ruling and Yahoo's response to it are both in question.

The case underscores the emerging wrangle over Internet jurisdiction and how to resolve legal conflicts that arise when dot-coms sell their wares in countries other than their own. Although the grip of foreign laws on U.S. firms with no physical presence in the foreign country is a tenuous one, legal experts said legislation and international treaties are being written to address enforcement of local laws on foreign companies.

"Yahoo can ignore the French courts if they want, because they have no jurisdiction here," said Jan Baran, a constitutional attorney at Wiley, Rein & Fielding in Washington.

"But Yahoo will never be free and clear in France, and if it ever opens offices or operations there, it could find itself potentially liable for violations under French law and have its assets seized."

After seven months of appeals, Judge Jean Jacques Gomez this week upheld the original court order against Yahoo. But the court gave Yahoo three months to either put a filter in place to block access of Nazi memorabilia to French citizens or face fines of 100,000 francs (roughly US$13,000) per day.

The ruling was based on French penal codes outlawing the trivialization or denial of the Holocaust. The International League Against Racism and Anti-Semitism and the Union of French Jewish Students brought the complaint against Yahoo and have threatened to boycott the company.

Chief Yahoo and company co-founder Jerry Yang told a French newspaper last June that Yahoo wouldn't alter its content to comply with a law originating outside the U.S. Yahoo officials refused to comment on the case this week.

Dan Burk, professor of law at the University of Minnesota, said French courts could seek an injunction against Yahoo through U.S. courts; however First Amendment protection makes U.S. enforcement bans on Nazi memorabilia unlikely.

Plans in the Works

The contentious issue of Internet jurisdiction has attracted the attention of the European Union and the United Nations through its Hague Convention. Both organizations have proposals in the works aimed at better enforcement of judgments in civil and commercial matters. The U.S. House Judiciary Committee began exploring the issue of local enforcement of foreign laws last June, under the Courts and Intellectual Property Subcommittee.

"When Coca-Cola goes into France, it complies with French law," said Burk. "Many dot-coms are relatively new and think that they are not subject to local legislation, but they are going to have to start thinking like more traditional corporations."

Web auctioneer eBay Inc. and online bookseller Inc. have both sought less litigious routes to resolving Internet jurisdiction conflicts.

Last November, Seattle-based voluntarily agreed to bar the shipment of Adolf Hitler's autobiography, Mein Kampf, in Germany, where the book is considered hate literature, even though it can be purchased legally in the U.S. "We believe in freedom of the press, but we based our decision on German law," said Amazon spokesman Bill Curry.

In accordance with local laws, San Jose-based eBay prohibits the sale of Nazi-related goods by its members on its sites in France and Germany. "We made it clear from the beginning that we would abide by their laws," said eBay spokesman Kevin Pursglove. He added that eBay's registered users must agree to follow the laws of the countries where they reside and where they do business.

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