A judge on Friday lifted a suspension on her order directing Microsoft to turn over a customer's e-mails stored overseas to US prosecutors, but the software company said it would not release any e-mails while it appeals the ruling.
Chief judge Loretta Preska of the US District Court in Manhattan had on 31 July upheld a magistrate judge's ruling on the e-mails, which have been held in a data centre in Ireland.
That prospect had drawn concern from technology companies - fearful of losing revenue from foreign customers worried that US law enforcement might win broad power to seize their data.
Microsoft in particular was stung by revelations last year by former National Security Agency contractor Edward Snowden and has been at pains to prove to customers that it does not allow the US government unchallenged access to personal data on its servers.
Preska had delayed enforcement of the government's search warrant so Microsoft could appeal.
But prosecutors later said that because her order was not a "final, appealable order" and because Microsoft had yet to be held in contempt, there was no legal reason to enforce the stay.
Preska agreed, saying her order "merely confirmed the government's temporary forbearing of its right to stay enforcement of the order it secured".
She added that "the fact the court has not closed this case cuts against Microsoft's argument" that her order was final and appealable.
The judge ordered both sides to advise by 5 September how to proceed.
However, Microsoft is still refusing to comply with the judge's order, pending attempts to overturn it.
"Microsoft will not be turning over the e-mail and plans to appeal," a Microsoft spokesperson told Reuters. "Everyone agrees this case can and will proceed to the appeals court. This is simply about finding the appropriate procedure for that to happen."
The case appeared to be the first in which a corporation has challenged a US search warrant seeking data held abroad.
AT&T, Apple, Cisco Systems and Verizon Communications submitted briefs supporting Microsoft's opposition to the warrant.
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