Jane K. Winn, The Emperor's New Clothes: The Shocking Truth About Digital Signatures and Internet Commerce, 37 Idaho L. Rev. 353 (2001), https://digitalcommons.law.uw.edu/faculty-articles/167
The Emperor's New Clothes: The Shocking Truth About Digital Signatures and Internet Commerce
Idaho Law Review
This Article critiques a specific set of assumptions about specific application of digital signature technology: that contracts will be formed over the Internet among parties with no prior relationships through reliance on digital signature certificates issued by trusted third parties to establish the identity of the parties. This application for digital signature technology was once seen as both its most ambitious and most promising application because, for parties with no prior knowledge of each other, there is not yet a reliable system of online identities in Internet commerce.
Parties with an ongoing commercial relationship can absorb the cost of offline communications such as faxes, telephone calls or face-to-face meetings to negotiate and execute an agreement governing the setting up of a reliable system for online authentication of parties to wholly electronic transactions. Parties that want to rely exclusively on online communications to create the framework for contracting as well as to enter into contracts, however, face a problem of infinite regress: how can the online communications that set up the system for confirming online identities itself be authenticated with nothing more to rely on than online communications?
Many supporters of digital signatures believed legislation was essential to cut through this Gordian Knot. Legislation could authorize parties unable to use a prior relationship or offline communications to confirm the validity of online identities to rely on digital signature certificates instead. Much legislation regulating the use of digital signatures is based on an unstated premise: liabilities must be imposed by law because private agreements will not be adequate to the task of regulating this technology.
This Article will summarize the original consensus regarding the role of digital signatures in electronic commerce, explain why that consensus was mistaken on many points, describe commercial applications of digital signatures that are gaining market share today and contrast them with the original consensus, and consider the implications of a major misperception of market trends for the future of electronic commerce legislation. A brief description of digital signatures and public key infrastructure is included in the appendix to this article.