It started as an inspiring story of entrepreneurial defiance in the face of government surveillance. Now, the tale of Lavabit, the defunct email encryption startup famously used by NSA whistleblower (and Nobel Peace Prize nominee) Edward Snowden, could instead be a cautionary one.

On Tuesday, three judges from the 4th U.S. Circuit Court of Appeals heard Lavabit's appeal of contempt-of-court charges that were levied against it after founder Ladar Levison refused to give the FBI unencrypted information about one of Lavabit's users, now assumed to be Snowden. After the government responded with a search warrant that would grant it access to all of Lavabit's encrypted data, Levison shut down Lavabit altogether, thereby positioning himself as a hero for privacy rights. Levison appealed the contempt-of-court charges, but if early reports are to be believed, Levison's heroics may not stand up in court.

According to PC World, the judges hearing the case were unimpressed by Levison's grandiose defense about what type of access government agencies should have to encrypted data. Instead, they focused on the fact that Lavabit was slow to respond to the FBI's requests. When the FBI first requested data on a single user, Levison waited two weeks to reply to the order. When he did respond, he suggested unencrypting the data internally and delivering it to the FBI within 60 days, instead of in real-time, as the FBI had requested.

"This is not what [Lavabit was] ordered to provide," Judge Paul Niemeyer stated, noting that "the FBI didn't want a middleman."

Meanwhile, U.S. attorney Andrew Peterson noted that the court order that would have granted the FBI access to all of Lavabit's data would have allowed the FBI only "to examine the information of the one person under investigation," PC World reports.

Judge Niemeyer asserted that the hype around the case is indicative of a broader "willingness to believe" that the government will abuse user data, and that the paranoia has been blown out of proportion.

If Lavabit's appeal is rejected, it could be bad news for other entrepreneurs with concerns about government data requests, as it seems the courts may be unwilling to discuss whether or not the government has the right to the data in the first place. If you don't comply, you don't have much ground to stand on.