A US federal appeals court on Thursday said the US government cannot force Microsoft Corp and other companies to turn over customer e-mails stored on servers outside the US.
The 3-0 decision by the 2nd US Circuit Court of Appeals in Manhattan is a defeat for the US Department of Justice, and a victory for privacy advocates and technology companies offering cloud computing and other services around the world.
Circuit Judge Susan Carney said communications held by US service providers on servers outside the US are beyond the reach of domestic search warrants issued under the Stored Communications Act (SCA), a 1986 federal law.
“[The US] Congress did not intend the SCA’s warrant provisions to apply extraterritorially,” she wrote. “The focus of those provisions is protection of a user’s privacy interests.”
Microsoft had been challenging a warrant seeking e-mails stored on a server in Dublin in a narcotics case.
It was believed to be the first US company to challenge a domestic search warrant seeking data held outside the US.
Thursday’s decision reversed a July 2014 ruling by then-chief judge Loretta Preska of the US District Court in Manhattan requiring Microsoft to turn over the e-mails. It also voided a contempt finding against the company.
“We obviously welcome today’s decision,” Microsoft president and chief legal officer Brad Smith said in a statement.
He said the decision gives people more confidence to rely on their own countries’ laws to protect their privacy, rather than worry about foreign interference, and helps ensure that “legal protections of the physical world apply in the digital domain.”
US Department of Justice spokesman Peter Carr said the agency was disappointed by the decision and reviewing its legal options.
The case has attracted strong interest from the technology and media sectors, amid concern that giving prosecutors expansive power to collect data outside the country could make it harder for US companies to compete there.
Federal prosecutors countered that quashing warrants such as Microsoft’s would impede their own law enforcement efforts.
However, Carney said limiting the reach of warrants serves “the interest of comity” that normally governs cross-border criminal investigations.
She said that comity is also reflected in treaties between the US and all EU countries, including Ireland, to assist each other in such probes.
Some law-enforcement officials have said obtaining such assistance can, nonetheless, be cumbersome and time-consuming.
The US Department of Justice is working on a bilateral plan to streamline how US and British authorities request data from companies in each other’s country.
A bipartisan bill was introduced in the US Senate in May to clarify when and where law enforcement may access electronic communications of US citizens.
Circuit Judge Gerard Lynch, who concurred in the judgment, urged the US Congress to modernize the “badly outdated” 1986 law to strike a better balance between law enforcement needs and users’ privacy interests and expectations.
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