U.S. top court rules that Microsoft email privacy dispute is moot

WASHINGTON (Reuters) - The U.S. Supreme Court on Tuesday dropped Microsoft Corp's MSFT.O privacy fight with the Justice Department over whether prosecutors can force technology companies to hand over data stored overseas after Congress passed legislation that resolved the dispute.

Silhouettes of mobile users are seen next to a screen projection of Microsoft logo in this picture illustration taken March 28, 2018. REUTERS/Dado Ruvic/Illustration

The justices heard arguments in the high-profile case on Feb. 27, but President Donald Trump on March 22 signed legislation into law that makes clear that U.S. judges can issue warrants for such data while giving companies an avenue to object if the request conflicts with foreign law.

“No live dispute remains between the parties over the issue,” the court said in an unsigned opinion, declaring the case moot.

Microsoft and the Justice Department had been locked in a dispute over how U.S. prosecutors seek access to data held on overseas computer servers owned by U.S. companies. The case involved Microsoft’s challenge to a domestic warrant issued by a U.S. judge for emails stored on a Microsoft server in Dublin relating to a drug-trafficking investigation.

The bipartisan new law, known as the Cloud Act, was supported by Microsoft, other major technology companies and the Trump administration but opposed by civil liberties groups that said it lacked sufficient privacy protections.

“We welcome the Supreme Court’s ruling ending our case in light of the Cloud Act being signed into to law. Our goal has always been a new law and international agreements with strong privacy protections that govern how law enforcement gathers digital evidence across borders,” said Brad Smith, Microsoft’s president.

A Justice Department spokeswoman declined to comment.

Microsoft, which has 100 data centers in 40 countries, was the first American company to challenge a domestic search warrant seeking data held outside the United States. The Microsoft customer whose emails were sought told the company he was based in Ireland when he signed up for his account.

During arguments in the case, which had been one of the most closely watched of the court’s current term, some justices urged Congress to pass a law to resolve the matter. Senator Orrin Hatch, a Republican led the efforts to pass the new law, attended the arguments.

The Trump administration had appealed a 2016 ruling by the New York-based 2nd U.S. Circuit Court of Appeals in 2016 that found that the emails in the Microsoft case were beyond the reach of domestic search warrants obtained under a federal law called the 1986 Stored Communications Act.

Reporting by Lawrence Hurley; Editing by Will Dunham