From...

by Craig Stedman

(IDG) -- A bill that would have set national standards for recognizing the legal merit of digital signatures failed to get enough votes in the U.S. House of Representatives yesterday and may not be brought back to the floor until next year.

The Electronic Signatures in Global and National Commerce Act, which was written by the House Commerce Committee, was supported by a 234-122 margin. But that fell four votes shy of the two-thirds majority needed to pass the bill under House rules.

The measure sought to give digital signatures the same legal recognition as written ones. But some consumer groups criticized provisions in the bill that they said would have overridden state regulations and allowed companies to start sending all contracts, warranty information and product-recall notices electronically rather than through the mail.

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That would have created the potential for people without access to the Internet or e-mail to be "tricked'' into agreeing to receive important documents electronically, said Margot Saunders, managing attorney at the Washington office of the National Consumer Law Center (NCLC).

"It's not necessary to do what this bill would have done in order to promote commerce over the Internet,'' Saunders said. "None of the objections we have even relate to digital signatures.''

The NCLC preferred another bill -- approved by the House Judiciary Committee but bypassed in favor of the proposal voted on yesterday -- "that just authorized electronic signatures, period,'' she added. "It just dealt with what the bill purported to do and no more.''

But Steve Schmidt, a spokesman for the Commerce Committee, said the argument that the bill would weaken consumer-protection laws was "a straw man.'' He blamed the failure to pass the measure on political pressure from the Clinton administration.

"The White House has unfortunately made this a partisan political issue,'' Schmidt said. "It doesn't want to give Republicans a victory on technology issues, period. But the Internet is the loser here.''

The growth of e-commerce could be slowed "if there aren't uniform standards for signing contracts,'' Schmidt added. "Everybody understands what would happen if each state had very different contract laws, or none at all.''

Rep. Thomas Bliley, a Republican from Virginia who chairs the Commerce Committee, hasn't decided on his next move and may not bring the bill back to the floor until early next year, Schmidt said.

The Information Technology Association of America (ITAA) lobbied in favor of the Commerce Committee bill and still hopes the measure will eventually be passed by the House, said Harris Miller, president of the industry trade group in Arlington, Va.

"I hope this is nothing more than a speed bump,'' Miller said. "I don't think there's any fundamental gap between the Democrats and the Republicans.'' The consumer issues raised by opponents are "such a red herring that it's hard to believe anyone is paying attention to that argument,'' he complained.

But it's unclear whether the bill can be resurrected, approved and sent to the U.S. Senate -- where a similar measure has been introduced -- before Congress adjourns for the year, Miller said.

The states are also expected to take up the issue of recognizing the validity of digital signatures on their own, but Miller said it could take several years for bills to work their way through all the state legislatures.