Appeals Court Denies Full Hearing in Data Surveillance Case

A federal appeals court said Tuesday it won't rehear a panel's decision letting companies like Microsoft refuse to turn over to the government customer emails stored overseas.

The judges of the 2nd U.S. Circuit Court of Appeals split their votes 4-4, meaning the full court will not take the rare step of rehearing a case that resulted in a victory for Microsoft and other high-tech companies in the cloud computing business.

Four judges wrote opinions dissenting from the decision not to rehear the case at the government's request. In July, a three-judge panel said prosecutors cannot force corporations to release customers' emails and other data stored on servers overseas.

Circuit Judge Susan L. Carney, who wrote the July decision, said in an opinion Tuesday that the original panel recognized the gravity of concerns that U.S. law enforcement will be less able to access electronic data when a judge decides it is probably connected to criminal activity.

She said the Stored Communications Act of 1986, which governed the case, "has been left behind by technology."

"It is overdue for a congressional revision that would continue to protect privacy but would more effectively balance concerns of international comity with law enforcement needs and service provider obligations in the global context in which this case arose," Carney said.

Prosecutors had sought information in 2013 from an email account stored in Dublin, Ireland, saying they thought it was being used in narcotics trafficking.

The government had no immediate comment Tuesday, a spokesman for lawyers in the case said.

Redmond, Washington-based Microsoft Corp. President Brad Smith said the company welcomes the ruling and that U.S. needs to update its laws.

"This decision puts the focus where it belongs, on Congress passing a law for the future rather than litigation about an outdated statute from the past," Smith said in a statement.

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