Microsoft sues U.S. over secret demands for customer data

SAN FRANCISCO - In the latest clash over privacy rights in the digital age, Microsoft (MSFT) is suing the U.S. government over a federal law that allows authorities to examine customer emails or online files without the individual's knowledge.

The lawsuit comes as the technology industry butts heads with U.S. officials over the privacy rights of customers.

Microsoft says the U.S. is abusing a decades-old law that allows a court to order the company to turn over email or other customer files that are stored on its servers, while prohibiting Microsoft from notifying the customer. The company says that violates constitutional rights of free speech and protection against unreasonable searches.

"Microsoft brings this case because its customers have a right to know when the government obtains a warrant to read their emails, and because Microsoft has a right to tell them," states the company's lawsuit, which was filed Thursday in federal court in Seattle. "Yet the Electronic Communications Privacy Act... allows courts to order Microsoft to keep its customers in the dark when the government seeks their email content or other private information, based solely on a 'reason to believe' that disclosure might hinder an investigation."

Representatives for the Justice Department did not immediately respond to requests for comment on the Microsoft lawsuit.

A U.S. House of Representatives panel on Wednesday advanced a bill that would change the Electronic Communications Privacy Act (ECPA) so that the government would be required to notify Internet service providers if it had issued a warrant for customers emails, online document and other private electronic communications. Unless it is blocked by a court order, the provider would have the option of informing users of the warrant.

Microsoft says in a lawsuit filed Thursday that authorities demanded customer information more than 5,600 times in the last 18 months. In nearly half those cases, a court ordered the company to keep the demand secret.

"We appreciate that there are times when secrecy around a government warrant is needed," Microsoft President Brad Smith said in news release. "But based on the many secrecy orders we have received, we question whether these orders are grounded in specific facts that truly demand secrecy. To the contrary, it appears that the issuance of secrecy orders has become too routine."

In an interview, Smith said the company decided to file its challenge to the law after a case where authorities threatened to hold Microsoft in contempt when it sought to contest a particular secrecy order.

"That caused us to step back and take a look at what was going on more broadly," he said. "We were very disconcerted when we added up the large number of secrecy orders we've been receiving."

The lawsuit comes as Apple (AAPL) has been waging a high-profile legal battle over the FBI's attempt to compel that company's help in obtaining data stored on iPhones.

"It's part of the same trend," said Alex Abdo, a staff attorney at the American Civil Liberties Union. He said tech companies "have gotten the message loud and clear from the American public, that privacy matters."

Privacy advocates say the ECPA, which was passed in 1986, has failed to keep up with developments in technology. As a result, law enforcement officials are able to access private content stored in the "cloud" without first getting a warrant, as they would be required to if they were searching a person's home.

The Center for Democracy & Technology, an advocacy group that promotes online civil liberties, expressed support for Microsoft's suit.

"As we live more and more of our lives online, our constitutional rights must come with us," said Chris Calabrese, vice president of policy at the organization, by email. "Their case is just the tip of the iceberg. One federal magistrate judge estimated that there are 30,000 sealed orders issued annually -- not just for the content of communication, but also things like the location information from cell phones. When the government violates an individual's privacy like this, they should have a good reason if they are not going to tell them about it."

Alan Butler, senior counsel for the Electronic Privacy Information Center, said Microsoft's suit raises "critically important" constitutional issues that affect all Internet users.

"Notice is one of the key protections provided under the Fourth Amendment, and law enforcement efforts to delay or otherwise restrict notice should be viewed skeptically by the courts," he said by email.