The US Department of Justice isn't giving up its fight to access content stored in overseas servers. Federal prosecutors in New York late Thursday asked a federal appeals court to reconsider its July decision that allowed Microsoft to successfully claim that authorities had no legal right to access data stored on its servers outside the country, even with a warrant from a federal judge.

A three-judge panel of the 2nd US Circuit Court of Appeals had ruled that federal law, notably the Stored Communications Act, allows US authorities to seize content in US-based servers, but not in overseas servers—in this case, Dublin, Ireland.

The dispute is an outgrowth of a years-long battle over whether Microsoft must hand over e-mails to New York prosecutors in a narcotics investigation. But the case has broader implications far beyond the drug probe. The case touches on consumer privacy, international relations, and the government's desire to investigate criminal activity.

The government said (PDF) the decision by the appellate court, one stop short of the US Supreme Court, was “unmoored from any precedent.” Federal prosecutors urged the court to reconsider its decision and said Microsoft doesn’t have the legal right to stand up for one of its e-mail customers. The decision by Microsoft to do so, the government said, was “profit-driven.”

The Opinion weighted heavily, unmoored from any precedent, the notion that Microsoft is the “caretaker” of customer’s privacy interests. See, e.g., Op. 31. This “caretaker” argument is not compelling where it is Microsoft who chooses the storage location and not the customer (indeed the customer does not even know where the content is stored), and both Microsoft and the Panel acknowledge that Microsoft would promptly disclose to the Government any customer email content that it chose to store in the United States. It cannot be true that the “focus” of the statutory provision is privacy, but the protection of that privacy interest rests entirely on the profit-driven decisions of a private business, with no choice by or consultation with the owner of the account and the beneficiary of the privacy interest.

The government argued that the precedent set by the court’s decision will hinder national security.

“The Opinion has created a regime where electronic communication service providers—private, for-profit businesses answerable only to their shareholders—can thwart legitimate and important criminal and national security investigations, while providing no offsetting, principled privacy protections,” the government argued.

The appeals court noted, however, that US authorities could try to access the e-mail via a drawn-out method under a Mutual Legal Assistance Treaty and serve a local warrant on Microsoft’s Irish subsidiary.

The case is being closely watched by the privacy community, media, and dozens of organizations and companies who lodged briefs in the case on Microsoft’s behalf. Among them are the US Chamber of Commerce, Amazon, Apple, Cisco, CNN, Fox News Network, Gannett, and Verizon.

When the original ruling was issued this summer, Brad Smith, Microsoft’s president and chief legal officer, said:

[The] decision provides a major victory for the protection of people’s privacy rights under their own laws rather than the reach of foreign governments. It makes clear that the US Congress did not give the US government the authority to use search warrants unilaterally to reach beyond US borders. As a global company we’ve long recognized that if people around the world are to trust the technology they use, they need to have confidence that their personal information will be protected by the laws of their own country.

The appeals court, based in New York, has no timetable to respond to the government’s plea to rehear the case. If it declines to do so, the government’s next step would be the Supreme Court.