Upholding a verdict that has unsettled the Internet industry in France for the last seven months, a court here ruled today that Yahoo must prevent World Wide Web users in France from visiting its auction sites that sell Nazi memorabilia, or face heavy fines for each day that it did not comply.
Lawyers for Yahoo, who have argued that such steps are technically not feasible, said they would study ways to appeal the decision.
The decision was a major victory for Jewish groups in France and for an international organization battling racism, which saw the case as a crucial test of the legal responsibility of Internet service companies for material or products that users might obtain over the Web.
In May, a French judge ruled that Yahoo, which is based in Santa Clara, Calif., had violated French law and offended the ''collective memory'' of the country, an allusion to the Holocaust years, by allowing online auctions of Nazi paraphernalia on its English-language auction site.
Yahoo's lawyers contended that the company was helpless and that it was technically impossible to identify Web users by national origin and block their access to sites. The court appointed a panel of three experts to evaluate that contention and earlier this month the experts testified that it probably would be possible for Yahoo to prevent most Web users in France from reaching the objectionable sites.
But one member of the panel, Vinton G. Cerf, a senior vice president of WorldCom and an early architect of the Internet, expressed concern about unwarranted regulation of Net traffic.
Jean-Jacques Gomez, a judge in Paris, dismissed Yahoo's defenses, and gave the company three months to find ways to prevent Web users in this country from gaining access to Web sites through Yahoo's American portal, www.yahoo.com, that sell Nazi paraphernalia like uniforms and weapons. If it failed to do so, Yahoo would be subject to a $13,000 fine at the end of the period for every day it did not comply, Judge Gomez ruled.
This was not the first time a European court has confronted the question of objectionable content on the Internet. In 1998, a judge in Bavaria sentenced the former head of Compuserve's German affiliate to two years in jail on charges of spreading pornography, arguing that there could be no lawless zones even on the Internet.
The verdict raised an outcry among proponents of free expression and others who argued that it was technically impossible to block access to such material. The decision was later overturned by a higher court.
Other Internet sites, including eBay, have excluded objectionable material after public criticism or threat of legal action.
Yahoo was taken to court by the French Union of Jewish Students and an antiracism group, the International League Against Racism and Anti-Semitism, which is based in Paris. The groups demanded that Yahoo's auction site be fined for each day it did not comply with French law, which prohibits the sale or display of anything that can incite people to racism.
Representatives of the plaintiff groups were pleased with today's ruling.
''Yahoo has no other choice than to conform to the ruling,'' said Stephane Lilti, a lawyer for the Union of Jewish Students. ''I can hardly imagine the world's biggest Internet portal picking a fight or seeking to resist.''
In his ruling, Judge Gomez recalled that Yahoo is able, at least in part, to recognize Web surfers from France and select them for French-language advertising banners.
And he cited Yahoo's policy of not allowing the sale of drugs, human organs or living animals on its auction sites.
The group of three experts, in its final report, conceded that Yahoo could probably filter out, with 90 percent accuracy, those who gain access to its sites.
Yahoo's lawyers in France said they regretted the decision. ''We hope that other countries won't take the same route,'' one of the lawyers, Christophe Pecnard, said. He said Yahoo regretted having to apply ''measures that won't be effective.''