by Karen Louden AllanachThrough electronic commerce, companies are conducting business more efficiently by cutting paperwork and time, but there are still many obstacles to clear on this new frontier.
A Baltimore company has patented one e-commerce technology solution that might alleviate the need for signed and sealed original paper documents.
The "Electronic Original" is patented and
trademarked by Document Authentication Systems Inc. (DAS) and is part of the company's DocuGuard™ software package.
"The problem with the business world is that it can't get rid of paper,"
said Douglas Trotter, the chief executive officer.
The private company was founded in late 1996 to target taking the paper work out of mortgage transactions. The company was financed by private venture
capitalists in Texas. Dallas-based DAS, with 20 employees, has a third office in Connecticut.
Trotter came aboard in 1997 after advising the company's founders about the technology solutions to achieve
their goal. "I really saw the value in it," he said.
The technology targets industries such as commercial leasing, mortgages and pharmaceuticals as well as government, where original copies are
necessary in business transactions.
Trotter said DAS uses a number of existing technologies to make the DocuGuard™ system work.
Through the DocuGuard™ package, the Electronic Original uses
special keying technology and cryptic codes that result in a secured, authentic original document, he said.
As with a blue-ink signature on a paper original, the computerized document contains an original
signature that cannot be forged, Trotter said.
The technology provides the user with a hand-held electronic name card that holds a person's digital signature and personal identification.
The original
document is kept in a computerized "vault," and only certified copies can be made from the document.
About $650 would be saved on an average loan closing that costs $3,200, using the Electronic
Original system, Trotter said.
Most transactions would save about 23 percent in administrative costs, he said.
John Bancroft, managing editor at Inside Mortgage Finance Publications Inc. in Bethesda,
said there is a strong interest by lenders and consumer advocacy groups to streamline and reduce paperwork in the industry.
"There's a number of projects underway in business-to-business
e-commerce," he said.
Barry Habib, president of Certified Mortgage Associates in New jersey, said the mortgage industry is moving forward with e-commerce, but is doing so cautiously. "There's a
place for [technology], but it's a slow-moving process in the mortgage industry."
The electronic industry is still evolving. While companies are developing different segments of e-commerce including
digital signatures, cryptography, imaging and certificate authorities, until now no one had figured out how to transfer ownership over the Internet, Trotter said.
Trotter predicts the company will garner
$3 million in revenues this year, with plans to have an initial public offering within five years.
Investors and partners in the company include Renaissance Capital Group, Arkoma Venture Partners, Perot
Systems Corp. and Prime New Ventures.
General Electric Capital Corp., the company's first major client, is conducting a pilot test of DocuGuard™.
Habib said the idea of the Electronic Original is
intriguing, but signed, notarized, paper originals carry a lot of weight with their worth and might he difficult to replace.
"It's something that people are going to be cautious of," he said.
Trotter said the Electronic Original technology might take three to five years to be embedded as a regular way to do business.
"People will fight us," he said, because of the patent on the
technology that is broad sweeping. With the patent, the company can control licensing and transaction fees for use of the product. Currently, the technology is difficult to sell because of the hazy state of
the e-commerce industry, Trotter said.
Other companies have patents on technologies to improve c-commerce, but there must be additional safeguards to ensure the security people are looking for in
electronic transactions, he said.
The DocuGuard™ system is said to enable "legally enforceable agreements, transactions and contracts," according to DAS literature.
It is a role of a
trusted third party, or "custodial utility," to validate signatures on a received document, date-time stamp and digitally sign the document. An electronic repository controls access to documents,
tracks originals and revisions and provides a trail of evidence and custody for the transaction.
Coleman said there are three top obstacles in e-commerce. Security is not one of the top three, but ranks
around number five, he said. The top issue is ease of use, as more businesses complain that people become lost on complex Web sites.
The second-greatest concern is dealing in a global tax, tariff and legal
environment. "There is no uniform code to go across the countries," Coleman said.
Businesses are running into roadblocks in international transactions, as most Web sites are not equipped to work
with foreign currency exchanges, which leads to the third problem for business to business -the European currency that will go into effect next year.
Coleman said if the Electronic Original proves to be as
effective as presented, it will be revolutionary for the electronic commerce industry. But until the courts render an opinion on its validity, he is skeptical: "It's a crapshoot."
Trotter stands
by the product and says it will greatly improve business-to-business transactions while not changing the basic way business has always been conducted, with contractually binding agreements.
"Most
businesses are governed by the state as a trusted third party. All we've done is patent that."
Go to: Next article,
