Proposed legislation was rejected Monday in the House of Representatives after House Democrats, who have said previously that the bill does not go far enough in protecting consumers, claimed they didn't have enough time to review its details.
H.R. 1714, the Electronic Signature in Global and National Commerce Act, was designed to ensure that contracts for commercial transaction affecting interstate commerce would not be voided solely because an electronic signature or record was used in its formation.
The bill, introduced by Rep. Tom Bliley, R-Va., was rejected by a vote of 234-122. It needed a two-thirds majority to pass.
Digital signature law needed
According to a spokesperson for House Democratic Leader Richard Gephardt, Democrats remain supportive of legalizing digital signatures, but needed more time to consider arcane legal issues contained in the bill.
"Republicans are just trying to prove they're more high-tech friendly," said Eric London, a spokesperson for Gephardt. "They see high tech policy as an easy way to raise money in Silicon Valley."
Partisan politics aside, both sides agree creating a uniform, national policy on the legality of digital signatures is a necessary step to ensure further development of electronic commerce.
Several state and local governments, including California, have passed laws that recognize digitally signed contracts as legally enforceable.
"Digital signatures are a vital piece of the e-commerce picture," said Paul Fahn, cryptographic analyst for Certicom, an encryption technology company. "The more companies move to electronic-only transactions, the more widespread the use and acceptance of digital signatures will become."
National legislation may not even be necessary from a legal standpoint, according to Marc Bernstein, an attorney specializing in Internet legal issues.
"From a contract law point of view, all the courts are going to be concerned with is the reliability of the signature," Bernstein explained. "If it can be traced to the person who made the promise, the courts aren't going to have a problem with that. The interface between the low tech legal issue and the high tech side is the reliability."
Digital signatures use encryption technology (see related story) to establish the authenticity of the signature.
"It's a cryptographically secure, mathematical operation," Fahn said. "It's not just typing your name at the bottom of an e-mail message."
The future of a congressional compromise on digital signatures remains uncertain. Gephardt referred to the failed vote as a "temporary setback" and said he hopes that a bill will be enacted this year.