updated 3/24/2005 9:11:44 PM ET 2005-03-25T02:11:44

Lawyers for Yahoo Inc. asked a federal appeals court Thursday for legal protection for U.S.-based Internet portals whose content is protected by the First Amendment in the United States, but illegal in foreign countries.

Some of the judges acknowledged the need for a shield for American companies in such situations, but suggested it was premature in the case of Yahoo, which is challenging a fine levied by a Paris court four years ago for allowing the site’s French users to buy and sell Nazi memorabilia, in violation of French law.

Yahoo asked the 11-judge panel of the San Francisco-based 9th U.S. Circuit Court of Appeals on Thursday to prevent the two French human rights groups that sued from collecting the fine — now at about $15 million and growing by as much as $15,000 per day.

But during 70 minutes of arguments, some judges noted that the French groups haven’t tried to collect.

“Where’s the beef? Why are we here?” asked Judge Ronald Gould.

Yahoo attorney Robert Vanderet said the human rights groups might try to collect, and that Yahoo isn’t the only Internet portal that needs to know whether U.S. courts would shield American companies from being liable abroad for lawfully protected speech originating in America.

“Yahoo needs assurances that that order is not enforceable in the United States,” Vanderet told the panel.

Yahoo’s French subsidiary, yahoo.fr, complies with France’s law, but a French judge ordered Sunnyvale-based Yahoo.com to strip Nazi paraphernalia from the portal’s most popular site, yahoo.com. Yahoo did not appeal the French order, and instead sought protection in U.S. courts.

A San Jose federal judge in 2002 ruled Yahoo, as an American company, was not liable, and the human rights groups appealed. A three-judge 9th Circuit panel overturned the judge, saying he ruled prematurely, since France’s Union of Jewish Students and the International Anti-Racism and Anti-Semitism League haven’t acted on the French judgment. Yahoo then sought Thursday’s rehearing before an 11-judge panel.

Judge Raymond Fisher speculated that Yahoo’s case was premature, but acknowledged the implications for free speech. “They’re seeking a remedy that is going to have a major impact in the United States,” Fisher said.

Yahoo says its international subsidiaries comply with local laws, and said it’s technologically impossible to censor its U.S. site for users in France.

Legal experts said if Yahoo can clarify its position in the United States, other U.S-based Internet service providers also will understand their liabilities.

“Who has a right to exercise legal jurisdiction over content that’s on the Web?” asked Jeffrey Pryce, an international lawyer from Washington, D.C. Suppose it was Saudi Arabia or Afghanistan, he asked. “It could get kind of frightening.”

The human rights groups’ attorney, E. Randol Schoenberg, said Yahoo has dramatically limited the Nazi material on its American site, and that his clients won’t try to collect unless Yahoo reverts “to their old ways.”

The appellate court can rule on the case at any time.

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