In July 2016, the US Court of Appeals for the Second Circuit based in New York reversed a decision by a Southern District of New York court which had held Microsoft in contempt of court for refusing to hand over customer emails that were stored on a server in Ireland.
The Department of Justice had asked for the data, claiming that they had relevance in investigations into a case of drug-trafficking.
The government's warrant had demanded that Microsoft release the contents of all emails stored in the particular account; records and information about account identification (including username and method of payment); all user records, including images and files; and all communications between Microsoft and the user about the account.
On Tuesday, the US Court of Appeals for the Second Circuit, in a 4-4 decision, refused to rehear an appeal of its own decision.
Judge Susan Carney wrote in the judgment that the original panel majority opinion explained why quashing the government's warrant "was called for by Supreme Court precedent on extraterritoriality and the text of the Stored Communications Act (SCA)".
"The theme running through the government's petition and the dissents is the concern that, by virtue of the result the panel reached, US law enforcement will less easily be able to access electronic data that a magistrate judge in the United States has determined is probably connected to criminal activity," she said.
"My panel colleagues and I readily acknowledge the gravity of this concern. But the SCA governs this case, and so we have applied it."
Justice Carney said the court recognised that "in many ways the SCA 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".
Storing the data of American customers abroad has become a practice whereby US companies can assure clients that their data will not be accessed by the NSA, a fear that has been fanned by the revelations by NSA whistleblower Edward Snowden in 2013 that the NSA was conducting blanket surveillance of American citizens.
This case was originally filed before Snowden's revelations in June 2013.