Microsoft Lawsuit Against Government Relies on Speech, Privacy Rights

When the US Department of Justice sought permission to search a Microsoft Hotmail account in 2014, a judge rejected one condition the agency asked for - an order preventing Microsoft from ever telling its customer about the search.

Microsoft was not asked to submit its views in the case, nor did it attempt to do so. On Thursday, however, Microsoft cited the Hotmail ruling as a key precedent in a lawsuit the company filed against the government challenging indefinite gag orders when the government subpoenas information from a customer account.

The company sees such orders as a possible barrier to potential clients considering the purchase of cloud storage services, an increasingly important part of Microsoft's business.

When a company keeps data on its own servers, the government must approach it directly with any warrant to search for data. But if the company relies on a third party for cloud storage, the government could go directly to the cloud provider, and the company might never know.

"We're hearing from our customers about it," said Brad Smith, Microsoft's president and chief legal officer.

Over the past 18 months, federal courts have issued nearly 2,600 secrecy orders "silencing Microsoft from speaking about warrants," the company said in its lawsuit. Two-thirds of those were indefinite, meaning there was no end date for how long they remained in effect.

The Justice Department has said it is reviewing the filing.

Microsoft's lawsuit challenges indefinite government secrecy orders as a violation of the company's First Amendment free speech rights, as well as a violation of Fourth Amendment privacy rights.

In the Hotmail case, US Magistrate Judge Paul Grewal ruled a limited gag order could be appropriate.

"The problem is that the government does not seek to gag Microsoft for a day, a month, a year, or some other fixed period," Grewal wrote. "Having persuaded the court that a gag order is warranted, it wants Microsoft gagged for ... well, forever."

Another magistrate judge in Texas came to a similar conclusion on First Amendment grounds in 2008, and Grewal followed up the Hotmail ruling with a similar one involving a Yahoo email user.

For its privacy argument, Microsoft relies partly on a Supreme Court ruling that police must announce themselves while serving a warrant.

US District Judge James Robart in Seattle will oversee the Microsoft lawsuit, according to the court docket. Robart, nominated to the court by former President George W. Bush, also presided over recent smartphone patent litigation between Microsoft and Google's Motorola Mobility unit.

Robart valued the Google patents much closer to Microsoft's position than Google's, a ruling upheld on appeal.

© Thomson Reuters 2016