E-Sign on the Dotted Line

Digital signatures move closer to reality, with a bill that would boost e-commerce.

Jennifer Jones and Margret Johnston, InfoWorld.com

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The bill, called the Electronic Signatures in Global and National Commerce (E-Sign) Act, overwhelmingly passed the U.S. House of Representatives and the U.S. Senate.

E-Sign does more than just make digitally signed documents legally binding. The bill likely will also help break through some of the cultural barriers related to digital signatures at a time when electronic signatures and related technology are rapidly advancing.

Because the validity of an electronically signed document has never faced legal scrutiny, many companies have balked at fully embracing digital signatures.

"When trying to use the technology, you would often discover 'gotchas' or face having one more lawyer pass his opinion on it. This removes a degree of risk and uncertainty," says Frank Jaffe, vice president of security at Clareon, a user of electronic signature-based systems.

Taking away the legal question marks could attract more interest from major corporations, says Bob Pratt, director of product marketing at Mountain View, Calif.-based VeriSign. "A lot of businesses are doing business electronically already and are signing documents digitally. This bill will help to further convince the fence-sitters."

Lawmakers who came out in force to support E-Sign say the bill will ease the transition at large corporations from paper-driven systems that control inventory, production and supply to an online environment.

It is this kind of mass deployment that has been missing, says Ben Gould, senior vice president of marketing at iLumin, an Orem, Utah-based vendor that provides e-commerce infrastructures that support the use of digital signatures.

"Corporations have wanted to use this kind of technology in pilot projects," Gould says. Representatives for iLumin claim the company has 40 partnerships in place for such pilots at companies including Dell, Intel, Hewlett-Packard, and AT&T.

But most of iLumin's partners and others dabbling in digital signature systems have not taken full advantage of the fact that those systems "can handle automation of filing and entering of data, which eliminates human error and cuts down on things like courier fees," Gould says.

Although E-Sign may spur the digital signature and e-commerce industries, the bill stops short of prescribing technology.

Consumers who agree to carry out a transaction online would have to affirm their intentions electronically, and a business would have to take reasonable steps to make sure consumers will be able to open digital documents on their computers.

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