The criminal case was brought against both Yahoo! and Koogle in October 2001 following a complaint filed by the Association of Auschwitz Deportees, a group of French Holocaust survivors and their families, and a human rights group called The Movement Against Racism and for Friendship Between People.
A civil case against Yahoo! ran independently of the criminal proceedings and continues in the US.
Yahoo! and Koogle were accused of two offences under French law: "justifying a crime against humanity" and "exhibiting a uniform, insignia or emblem of a person guilty of crimes against humanity." The offences carry a maximum of up to five years in jail and a fine of up to €45,700.
The Yahoo! auction offered Nazi, neo-Nazi and Ku Klux Klan memorabilia to on-line bidders, including films, swastikas, daggers, uniforms, photos and medals. Notably, the yahoo.fr site – the site targeting French internet users – has always forbidden such auctions.
The issue was over the fact that French users, if they chose, could visit the US site, yahoo.com. Yahoo! later amended its conditions for yahoo.com users wanting to post internet auctions; such sales are now forbidden, although in doing so, Yahoo! cited ethical, not legal reasons.
A Paris court ruled in February 2003 that neither charge against Yahoo! and Koogle had been proved. Under French laws, the court said, justifying war crimes means "glorifying, praising, or at least presenting the crimes in question favourably". According to the court, the activities of Yahoo! did not match this definition.
The verdict on Yahoo! could not be appealed under French law, according to news site Libération. But Koogle's acquittal could, and on Wednesday, the Paris Court of Appeals upheld his acquittal.
Yahoo!'s prosecution was separate from a civil lawsuit against Yahoo! over the same issue, which was filed in 2000 by the French Union of Jewish students and the International Anti-Racism and Anti-Semitism League.
These groups sought a court order in France obliging Yahoo! to make all auctions in question inaccessible to internet users in France and its territories. That case led to a landmark ruling, with a Paris court ordering Yahoo! to block internet users in France from accessing its auction sites selling Nazi memorabilia.
The court reasoned that French law prohibits the display or sale of anything that incites racism. It was the first time a French court had issued such an order on a foreign company.
Yahoo! then asked a US federal court to declare that the company was not obliged to obey the French ruling.
The Californian court agreed with Yahoo!'s arguments. But the two French groups appealed the decision, and in August 2004, a divided Court of Appeals reversed the lower court decision, ruling that the District Court did not have jurisdiction to hear the case.
In February 2005, the Ninth US Circuit Court of Appeals said it will rehear some of the arguments in the case.