Back in December 2013, a U.S. magistrate issued a seemingly routine warrant in a narcotics case demanding that Microsoft turn over messages from a customer’s email account that resided on a server in Ireland. That warrant, which issued under a 1986 law called the Stored Communications Act (“SCA”), 18 U.S.C. § 2703, is still being debated today.

Launching a lengthy (and still ongoing) legal battle, Microsoft elected not to comply with the warrant. Instead, Microsoft challenged the warrant in the district court, arguing that it was invalid and should be vacated. Microsoft argued that, in order to access customer emails and records stored on Irish servers, the government should be obliged to pursue traditional bilateral law enforcement and diplomatic channels such as the Mutual Legal Assistance Treaties and other traditional mechanisms of international cooperation among law enforcement entities. After a nearly two-hour hearing, U.S. District Judge Loretta A. Preska, the chief judge of the Southern District of New York, affirmed an earlier magistrate’s ruling and ordered Microsoft to produce customer email content data stored on a server located in Dublin.

Microsoft appealed, this time to the United States Court of Appeals for the Second Circuit. Before the appellate court, Microsoft again argued that the SCA’s reach did not extend to servers located outside the United States.

On July 14, 2016, Microsoft prevailed. The Second Circuit held that the government cannot employ a domestic search warrant issued under the SCA to compel disclosure of communications stored on servers located outside of the United States. In the Matter of a Warrant to Search a Certain E-Mail Account Controlled and Maintained by Microsoft Corporation, 14-2985 (Lynch, J., Carney, J., Bolden, J., sitting by designation). Interpreting the warrant provision of the SCA, the Court held that, since Congress did not intend the SCA’s warrant provision to apply extraterritorially, emails stored on a server in Ireland were off limits. Judge Lynch concurred in the judgment, but wrote separately to urge Congress to amend the SCA to account for technological advancements since the SCA was passed in 1986.

In October 2016, the government sought en banc review. En banc review is a rare step in which the Second Circuit can decide to convene as a full court of active judges to re-hear argument on vitally important cases. Before a case can be re-argued en banc, a majority of the court must agree to re-hear it. Only active members of the appeals court bench can vote on en banc petitions. The Second Circuit has eleven active judges. Three judges recused themselves from this vote, leaving only eight judges to decide the matter.

Yesterday, the judges split 4-4 on whether to rehear the case, thereby dooming the petition and handing Microsoft another victory. Each of the judges who voted in favor of the (defeated) effort to permit rehearing issued a separate dissent. Former Chief Judge Dennis Jacobs noted in his dissent, joined by three other judges, that the information sought by prosecutors was easily accessible to Microsoft from the United States with the help of technology, even though it was stored in Ireland. He found privacy arguments unconvincing: “Privacy, which is a value or a state of mind, lacks location, let alone nationality,” he wrote.

In contrast, Judge Susan Carney, who wrote last year’s majority opinion in favor of Microsoft, wrote a separate opinion rejecting Jacobs’ argument that a court order was domestic if the company operated in the United States, notwithstanding the fact that the data sought is stored overseas. Judge Carney noted that to call such an application “domestic runs roughshod over the concerns that undergird the Supreme Court’s strong presumption against extraterritoriality.” Judge Carney also agreed, however, that the SCA “ha[d] been left behind by technology” and urged Congress to consider “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.”

Is this the end of the road for the SCA warrant? Hardly.

Although a Justice Department spokesman was not committal when asked for a statement, most expect that the Justice Department will seek review of this decision at the U.S. Supreme Court. It is unlikely that the change in Administration from President Obama to President Trump will shift the Department’s interest in this case. There's also the possibility that Congress will step in with a legislative fix.

The stakes in this case are high and it has broad implications for businesses that store massive amounts of data around the world. As an example, Microsoft stores data from more than 1 billion customers and more than 20 million businesses on servers in over 40 countries.

Thus, the story continues. And we will continue to report on it.