• PC World
• » Computers

If you thought the paper vs. plastic decision was hard, get ready for paper vs. digital. Thanks to the E-Sign law that takes effect this week, electronic signatures can be used with the same protections and financial disclosures of paper contracts.

Replacing paper-based legal documents could save businesses millions in overnight delivery, clerical labor, document storage, and legal fees. The Internet enables instant delivery, as well as the capability to tap into existing document management and database systems. As a result, digital signatures are set to streamline business-to-business exchanges, government applications, loan and credit agreements, and more.

E-Sign, more formally known as the Electronic Signatures in Global and National Commerce Act, backs up similar legislation in effect in 46 states. (See "Clinton E-Signs Off on Digital Signatures.")

E-Sign requires that businesses offer consumers the option of a paper-only transaction, confirm that consumers have a sufficient PC setup, and use paper documents for notices of termination. The law excludes a number of documents that still must exist in paper form, including wills, adoption papers, divorce documents, court orders, utility termination notices, foreclosures and eviction notices, insurance cancellations, and warnings required for transportation of hazardous materials. (See "E-Sign on the Dotted Line.")

While E-Sign doesn't require a particular technology, the vast majority of electronic signature solutions use encrypted digital signatures based on Public Key Infrastructure technology. Major PKI firms include Baltimore Technologies, CyberSafe, Entrust Technologies, RSA Security, and VeriSign.

With a typical PKI solution, you send a digital certificate created by a set of encrypted mathematical codes that uniquely identifies you. You use a combination of public and private keys to establish that a digital document has made it over the wires unmolested and that the sender owns the signature on the document. Usually, the signature transaction involves a third-party certificate authority such as Digital Signature Trust or ValiCert, which validates the signature.

Smart Cards, Smart Pens

For added security and convenience, some schemes call for smart cards that include digital IDs, so you can link a signature to an individual rather than a computer. This is not the same as simply a digitized version of a signature, which can be accomplished with, say, a scanner or digital pen.

Those who prefer to work with traditional handwritten signatures can call upon smart pens that register unique signature movements. These include LCI Technology's Smartpen and a new product from digital certificate vendor PenOp, which incorporates Wacom's Graphire Pen. For high-security applications, more exacting biometric devices such as thumbprint scanners, voice-pattern recognition, and even retinal scans are on the way.

Many Alternatives

Digital signatures are just one part of a growing content security business that is attracting everyone from business-to-business software firms to document management companies and computer-security vendors.

Companies can hire a firm such as Entrust or VeriSign to help them create a signature solution customized for their business processes. UPS, for example, is using DataCert's technology to create UPSDocument Exchange Invoices--a hedge against the day when digital certificates threaten the overnight carrier's contract cash cow.

Other companies may prefer to experiment with an off-the-shelf solution such as Silanis Technology's ApproveIt, which lets you easily attach digital signatures to any document.

You can also outsource the process to Internet-based services such as DataCert, ILumin, and ISignOnline.com, which provide secure, neutral virtual meeting rooms for businesses to sign contracts online. These Internet notaries facilitate the core PKI and digital certificate functions. They also often handle everything from document management to secure VPN pipelines to online electronic storage.

• See more like this:
• digital signatures,
• E-Sign,
• PKI,
• encryption