A U.S. appeals court has quashed a search warrant that would have required Microsoft to disclose contents of emails stored on a server in Ireland, in a case that has broad ramifications for privacy, diplomatic relations and the ability of American companies to sell web services abroad.
"We think Microsoft has the better of the argument," said Circuit Court Judge Sarah Carney, in an opinion written for a three-judge panel of the U.S. Court of Appeals for the Second Circuit in New York.
The panel based its judgment on the 30-year-old U.S.Carney wrote, "
Microsoft in 2014 asked the appeals court to reverse a ruling requiring it to turn over the emails, sought by law enforcement as part of a drug-trafficking case. The name and country of residence of the person whose email is being sought has not been revealed.
The case has had the U.S. technology industry worried. American tech companies have said they will not be able to sell web-based applications and services abroad if they can’t keep U.S. officials from unilaterally seizing records stored in foreign countries. In addition, a ruling for the U.S. government, they said, could clear the way for foreign governments to order local companies to hand over data stored in the U.S.
"This is a big case -- the technology companies have a very good point," said Robert Cattanach, a partner at the international law firm Dorsey & Whitney, noting that Europe is looking more carefully than ever at international data transfer rules.
In October last year, the Court of Justice of the European Union declared invalid a "safe harbor" agreement, on which thousands of companies including Google, Facebook, and Apple rely for the transatlantic transfer of personal data. The court ruled that the accord inadequately protected the privacy of EU citizens.
The U.S. and the EU, meanwhile, have negotiated a new pact, called the Privacy Shield data protection agreement.
Given the turmoil in the legal arena, ordering U.S. service providers to turn over data stored abroad could make them run afoul of foreign laws, Microsoft lawyer E. Joshua Rosenkranz said in a letter to the appeals court.
Tech companies, lobbying groups and media associations have written briefs to support Microsoft’s position, including Verizon, Apple, Accenture, Rackspace, the American Civil Liberties Union and the German Magazine Publishers Association, known as VDZ.
The case goes back to December 2013, when Magistrate Judge James Francis of the District Court for the Southern District of New York authorized a search warrant for all emails and other information belonging to the Microsoft user under investigation. Microsoft complied by providing non-content information held on its U.S. servers but after it determined that the account was hosted in Dublin, it filed to quash the warrant. It argued that U.S. courts are not authorized to issue warrants for extraterritorial search and seizure.
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