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The U.S. Supreme Court Dismisses U.S. v. Microsoft Following Passage of the CLOUD Act

On April 17th, the U.S. Supreme Court dismissed the highly anticipated U.S. v. Microsoft, ruling that recently enacted legislation rendered the case moot. Microsoft Corp. had been in litigation with the U.S. Department of Justice (DOJ) for several years over the issue of whether Microsoft must comply with a U.S. search warrant for access to customer’s emails and other personal data within its “possession, custody or control”, regardless of whether such data is stored within the U.S. or abroad. The Supreme Court’s ruling has been anticipated since March, when President Trump signed into law the Clarifying Law Overseas Use of Data Act (CLOUD Act), H.R. 4943, which amends a provision of the Electronic Communications Privacy Act of 1986 (ECPA), clarifying the federal government’s authority to access U.S. individuals’ data and communications stored abroad.

The dispute between Microsoft and the DOJ arose in 2013, when prosecutors served Microsoft with a warrant issued under the Stored Communications Act of 1986 (SCA), a provision of the ECPA, demanding that the company turn over personal emails and data of a user account associated with a criminal drug trafficking investigation. Microsoft complied with the warrant to the extent that such data was stored on servers in the U.S. However, a portion of the requested data was stored on a server in Ireland that Microsoft refused to turn over.

The Supreme Court agreed to hear the dispute in October 2017, after the U.S. Court of Appeals for the 2nd Circuit, in July 2016, quashed the warrant issued by the DOJ, holding in favor of Microsoft, which the DOJ appealed. In oral arguments before the Supreme Court in February, the DOJ and federal law enforcement argued that technology companies are disrupting criminal investigations in their refusal to turn over cloud data stored on servers abroad. It should not matter where data is stored if it can be accessed “domestically with a click of a computer mouse”, the DOJ argued. Conversely, Microsoft argued that the SCA, the basis for the DOJ’s warrant, was not equipped to address new technologies and usage.

The CLOUD Act, enacted on March 22nd, clarifies the federal government’s authority to compel data stored abroad and creates new procedures for issuing such warrants. The new legislation also affords a company the opportunity to move to quash a warrant on the basis that there is a “material risk” that the demand would violate foreign law.

Following passage of the CLOUD Act, the DOJ filed a motion to dismiss the case on grounds that the new legislation rendered the dispute moot, and stated that it would withdraw the original warrant and reissue a new one under the procedural requirements of the CLOUD Act, to which Microsoft, in a subsequent motion, agreed. “There is no reason for this court to resolve a legal issue that is now of only historical interest,” Microsoft stated in its motion.

The CLOUD Act has been broadly supported by both law enforcement and the technology sector, both in agreement that the 30-year-old SCA was in need of significant updates. Full implications of the new legislation will take time to become evident.

Jackson Lewis P.C. © 2018

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About this Author

Principal

Joseph J. Lazzarotti is a Principal in the Morristown, New Jersey, office of Jackson Lewis P.C. He founded and currently helps to co-lead the firm's Privacy, e-Communication and Data Security Practice, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP) with the International Association of Privacy Professionals.

In short, his practice focuses on the matrix of laws governing the privacy, security and management of data, as well as the impact and regulation of social media. He also...

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Attorney

Maya Atrakchi is the Knowledge Management (“KM”) Attorney for Jackson Lewis P.C.’s Privacy, e-Communication and Data Security and International Employment Issues Practice Groups, and is based in the New York City, New York, office of Jackson Lewis P.C.

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