Copyright 2000 eMediaMillWorks, Inc.
(f/k/a Federal
Document Clearing House, Inc.)
Federal Document Clearing House
Congressional Testimony
October 9, 2000, Monday
SECTION: CAPITOL HILL HEARING TESTIMONY
LENGTH: 5334 words
COMMITTEE:
SENATE JUDICIARY
HEADLINE: TESTIMONY
PRIVACY AND COPYRIGHT ISSUES IN THE HIGH TECH ECONOMY
TESTIMONY-BY: D. BRENT ISRAELSEN, , ESQ. PRESIDENT AND
CEO
AFFILIATION: ,ILUMIN CORPORATION
BODY:
October 9, 2000 D. Brent Israelsen, Esq.
President and CEO, iLumin Corporation Senate Judiciary Committee Field Hearing
Speaker Introduction D. Brent Israelsen is a 1982 graduate of the J. Reuben
Clark Law School at Brigham Young University. Mr. Israelsen served as Special
Assistant to the Deputy Solicitor at the US Department of the Interior from
August 1982 until June 1983 before becoming a law clerk to the Honorable Moody
R. Tidwell, III at the United State Claims Court. From October 1984 until August
1993, Mr. Israelsen practiced law in the Washington, DC Office of the
International law firm of Morgan Lewis & Bockius where he focused on
technology and federal government procurement issues. In August of 1993 through
May of 1995, Mr. Israelsen served as President of Jurisoft, a division of
Lexis-Nexis. Mr. Israelsen co-founded the Utah Electronic Law and Commerce
Partnership (www.uelcp.org) and served as a member of the Utah Electronic
Commerce Council. Company Overview Founded in 1996 by Mr. Israelsen, iLumin
Corporation (www.ilumin.com) is a privately held, Utah-based company that
delivers Internet infrastructure technology and services that enable enforceable
online transactions that accelerate the closure of business, financial,
government and consumer transactions in the New Economy. Introductory Remarks On
July 4, 1776, fifty-six men, risking their lives for their vision of a better
future, put pen to paper to sign the Declaration of Independence, decisively
publishing, declaring and binding themselves to the principles of freedom
enumerated therein. These were the visionary leaders who laid the foundation for
the future prosperity of this great nation. More than two hundred years later,
Governor Michael Leavitt of Utah, another visionary leader, signed into law on
March 9, 1995 the nation's first Digital Signature Act, setting the course
towards a digital future for the State of Utah. This Act, for the first time
anywhere in the world, established legal parity between digitally- signed
electronic documents and manually-signed paper documents. On June 30, 2000,
President Bill Clinton extended the digital economy to the federal government
and across all states by signing into law the Electronic Signatures in Global
and National Commerce Act (E-SIGN) using a computer terminal and a digital
signature (provided by a Digital Signature Trust, a Utah company). At this
historic signing, President Clinton firmly published, declared and bound the
nation to a digital future with the use of his digital signature. This event,
combined with the passage in 1998 of the Government Paperwork Elimination Act
(which requires full digital access to the federal government by 2003), marked a
major endorsement by the federal government in support of a revolutionary
movement towards a digital future. With these actions, the federal government
has laid the foundation required to fully unleash the potential of E-Commerce in
the New Economy. While there are still some problems that must be addressed, we
need to keep moving forward in our quest for a more efficient digital economy.
Today, we meet with you, Senator Hatch, to discuss what Utah companies,
generally, and what iLumin Corporation, specifically, are doing to further the
digital revolution, and what government can do to help facilitate the process.
E-Commerce Overview Today, e-commerce can best be described as buying books,
flowers and Furby's_ over the Internet. These are essentially credit card
transactions where the merchant is willing to bear the risk of loss if the
purchaser repudiates responsibility for the transaction. While this level of
e-commerce has gotten us out of the starting blocks, the real growth (as
projected by analysts) comes at the next level of e-commerce. Instead of just
buying books, flowers and Furby's (and airline tickets and CDs), the next level
of e-commerce relies upon the execution of legally- binding documents over the
Internet that will allow the purchase of cars, houses and companies. The federal
E-SIGN legislation opens the door for these types of transactions. However, we
must still address other problems in order to benefit fully from the
opportunities offered by the E-SIGN legislation. The primary issue impeding
rapid growth in e-commerce is the issue of trust. In a 1998 survey of technology
executives, Ernst & Young concluded: "Lack of trust has emerged as the
overwhelming leading barrier to the continued growth of electronic commerce."
Ernst & Young/ITAA Survey of Technology Executives Feb 1998 How do we cloak
e-commerce with a mantel of trust sufficient to encourage broad participation in
the digital economy? In order to be trustworthy, iLumin believes that an
e-commerce transaction must have the following attributes: private and secure,
enforceable and auditable, and automated and efficient. Private and Secure In
reality, there are strong parallels between the paper world and the electronic
world with respect to privacy and security. The differences are those of scope
and speed. We are generally comfortable transacting business in the paper world
because we have grown comfortable with the risks associated with paper-based
transactions. We are generally uncomfortable transacting business in the
electronic world because we don't fully understand the risks and we lack clear
guidelines and processes that will allow us to comfortably quantify those risks.
Paper is old technology that provides little to no privacy or security, yet,
over time, we have grown to trust and rely on paper-based transactions.
Information transmitted on paper can easily be intercepted through the mail,
courier or even fax-based systems. Many hands and eyes have access to
information on paper throughout the entire transaction process. After the
transaction process is complete, paper documents are stored and can be easily
accessed. Finally, even though a transaction may be paper-based, most of the
data on that paper is stored electronically already. By applying new
technologies to old problems, we can improve privacy and security in the
electronic world over what we currently live with in the paper world. Not unlike
its role in the current paper-based transaction processes, government needs to
play a similar role in determining policy and alleviating unnecessary public
fears. The passage of digital legislation at both the state and federal levels
is a major step forward. However, government needs to continue to work closely
with business, government and private entities to establish a legal framework
and basic guidelines surrounding pertinent issues such as privacy and security.
According to a March 2000 Harris poll conducted for Business Week, a company's
privacy policy would encourage consumers to use the internet more, to purchase
from that company, register on that company's web site, and participate in
online transactions with that company. TRUSTe.org provides additional insight
into web-users perceptions regarding the disclosure of information and privacy
policies. Drawing from a Harris/Westin survey, TRUSTe.org indicated that
sixty-three percent of users that are now reluctant to provide personal
information online say they would divulge information if Web sites disclose
clearly how the information will be used. Referring to a BCG Survey, TRUSTe.org
indicated that users are two to three times more willing to provide sensitive
information to companies that disclose their information gathering and
dissemination practices. A public-private partnership, working to help establish
clearer policies and guidelines regarding use of information and disclosure of
privacy and security policies on web sites, would help alleviate current fears
and help grow trust in e-commerce. Enforceability and Auditability In the paper
world, enforceability comes in the form of a signature on a paper document. With
current technology and the recently enacted federal legislation, an electronic
equivalent is now available. However, not everyone is ready to step forward and
use the electronic equivalent. The biggest issue is cultural ---- paper is a
4,000 year-old technology. We are comfortable holding paper in our hands and
filing it in our filing cabinets. We are quickly making the cultural transition
from a paper world to a digital world. Government can help speed up this
transition by proactively participating in electronic transactions and accepting
electronic filings or submissions of information. Another issue impacting the
move to a digital future is one of authenticating the participants in digital
transaction. Under a paper paradigm, personal interaction or notaries
authenticate the participants in a transaction. Under a Public Key
Infrastructure (PKI) approach, Certificate Authorities (CA) act as the digital
equivalent of the notaries of the paper world. In fact, the E- Sign legislation
permits digital notaries to fulfill the notary function. Current digital
signature technology, combined with the authentication function, provides
greater ability to identify and authenticate individuals signing an electronic
document while providing a more detailed, unalterable ability to create and keep
a complete audit history of an electronic transaction. However, to take full
advantage of current technology and legislation, government needs to help
clarify the scope and applicability of current legislation to avoid confusion.
Government must also work with businesses, government and private entities to
establish a framework and guidelines to enable cross- certification of
Certificate Authorities and to define uniform Transaction Policy Statements for
digital signatures applicable to government transactions. Efficiency and
Automation To achieve the full benefits of the digital economy, government must
facilitate enforceable online transactions and provide digital access to
government services. The passage of the Government Paperwork Elimination Act of
1998 lays the foundation for digital access to federal government services. In
discussing the need for the Government Paperwork Elimination Act, Senator
Abraham of Michigan noted that Americans spend over $600B a year filling out,
documenting and handling government paperwork--- a huge loss of time and money
and a drain on the economy --- that must be brought under control. In describing
the Act, Senator Abraham stated: " It would require Federal agencies to make
versions of their forms available online and allow people to submit these forms
with digital signatures instead of handwritten ones. It also sets up a process
by which commercially developed digital signatures can be used in submitting
forms to the government and permits the digital storage of federal documents."
The federal E-SIGN legislation provides the legal infrastructure required to
implement the Government Paperwork Elimination Act. Now federal agencies are
required, by 2003, to make their forms available electronically so they can be
filled out, signed and filed with agencies electronically. While this is a good
start, more is needed to spur government forward in adopting a digital future.
While we are not advocating mandatory usage of digital transactions, we are
advocating mandatory availability of digital transactions across all segments of
the economy for those who would like to use them. iLumin's Automated Enforceable
Online Transactions iLumin defines an automated enforceable online transaction
as one that fully incorporates the requirements of privacy and security,
enforceability and auditability, and efficiency and automation. Automated
enforceable online transactions bridge the opposing paradigms of data automation
in the information technology world and document enforceability in the legal
world. iLumin's Digital HandshakeO Server enables the execution of automated
enforceable online transactions and helps infuse trust in the rapidly- expanding
digital economy. (www.ilumin.com). Building on Utah's leadership in the digital
economy, iLumin used its Digital Handshake Server_ to complete the world's first
online home refinance in Utah County on June 29, 2000. Additional iLumin
industry firsts include: _ February 1999 - Utah's Third District Court, enabled
by technology jointly developed by iLumin and the Administrative Office of the
Utah Courts, becomes the first court in the United States to accept
digitally-signed legal filings via the Internet. _ March 1999 - Governor Leavitt
of Utah signs the Digital State Act into law using iLumin's Online Signing Room
and a digital certificate issued by UserTrust, another Utah company, becoming
one of the first Governors to sign legislation electronically. _ September 1999
_ The Utah Country Recorder, using iLumin technology, becomes the first in the
United States to electronically record a legally-binding, digitally-signed deed
affecting the transfer of real property. _ And on October 1 and 2, 2000, using
iLumin's Digital Handshake Server, the first transactions executed under the
federal E-SIGN Legislation, including: The first venture capital equity
investment (completed 10 minutes after the E-SIGN legislation went into effect)
Closing of two real estate transactions (Utah and Massachusetts) and the first
purchase of a promissory note under the E-SIGN legislation by Freddie Mac in the
secondary mortgage market The first automobile purchase and automobile financing
was executed under the E-SIGN legislation The first corporate acquisition
conducted under the E-SIGN legislation The execution of the first W-4 form
conducted under the E-SIGN legislation iLumin's leadership in Utah, in the
nation, and in the world continues to expand the reaches of e-commerce and to
push forward the boundaries of our digital future. How iLumin's Digital
Handshake Server_ Makes Our Future Easier E-commerce technologies like iLumin's
Digital Handshake Server, combined with digital signatures, will change the way
we do business in the future. Imagine purchasing your next car completely
online, from selection to purchase to registration, from an Internet terminal at
your office. Imagine closing on your new home from the comfort of your apartment
on a Friday evening and moving in on Saturday morning. Imagine applying for and
closing on a business loan, obtaining a business license, and leasing your new
office space, all with the click of a button, from the comfort of your new home.
This can all be possible because of the Internet, the E-Sign legislation and
digital signatures, and applications such as iLumin's Digital Handshake Server.
The benefits of living in the New Economy are many. However, the primary
benefits can be summarized as huge savings of time and money for all
participants in the digital economy. Other benefits flowing directly from
iLumin's technology include the following: iLumin's Digital Handshake Server
enables a much higher level of privacy and security for businesses, governments
and consumers, provides full enforceability and auditability of online
transactions, and facilitates efficiency through full automation of a digital
transaction from start to finish. iLumin's Digital Handshake Server delivers the
technology necessary to accelerate the closure of business, financial,
government and personal transactions and removes the hassle of doing business by
humanizing technology. iLumin's Digital Handshake Server is the first fully
automated technology solution that enables people to securely and privately
complete a legally-binding online transaction from start to finish while
integrating with existing information technology and e-business infrastructures,
thus eliminating the costly re-keying of data. Finally, iLumin's Digital
Handshake Server technology dramatically reduces the time, costs, inefficiencies
and errors associated with today's labor-intensive, paper-based, transaction
processes. Policy Recommendations What policies should the government be
pursuing to further electronic commerce? The role of the government in the
digital economy is to encourage trust in the e-commerce marketplace. This should
not be done through burdensome and restrictive government regulations that can
stifle the growth of e-commerce, but through a combination of limited
legislative frameworks to protect those who can't protect themselves, combined
with prudent business practices implemented through complete and accurate
disclosure statements and negotiated contractual relationships. So far the
government has done a good job in balancing the need for limited legislation
with the need to allow e-commerce to develop within the confines of the private
sector. Examples of key legislative enactments that provide needed guidance and
protection without overreaching and unnecessarily interfering with a
rapidly-changing and vibrant digital economy include the federal E-SIGN
legislation, the Cyber-Squatting legislation, updates to copyright and patent
legislation, and legislation protecting children on the Internet. Additional
government focus is required with respect to the following: Expand the federal
E-SIGN legislation to encompass all transactions, including all government
actions and transactions, providing participation on a voluntary basis by anyone
who chooses to participate in the digital economy. Consider additional digital
signature legislation that provides governments, businesses and consumers with
the flexibility to implement different levels of authentication security for
different types of transactions. For example, greater authentication of the
parties is required for a completing a mortgage transaction online than for
purchasing a fishing license online. Establish a minimal legislative framework
governing protection of privacy and security in digital transactions that sets
forth basic processes and guidelines for government, businesses and consumers
implementing privacy policies describing the use of
personal and business information in the
digital economy. Conclusion In summary, the government should continue to
provide limited legislative structure and guidelines while working with the
private sector to encourage, monitor, and, where necessary, to enforce the basic
laws and guidelines already set forth. The government can further facilitate our
transition to a digital future by helping build trust surrounding the privacy
and security of information by: encouraging companies to comply with existing
privacy and security laws and regulations; encouraging companies to develop
privacy and security policies for the data they collect; monitoring whether
companies comply with their privacy and security policies; and enforcing
existing laws and regulations regarding fraudulent business practices against
those companies that fail to comply with their privacy and security policies.
Thank you for the opportunity to testify this morning.
LOAD-DATE: November 8, 2000, Wednesday
