Guide to Computer Law—Number 284
Practitioner’s Perspective
by Holly K. Towle, J.D.
PKI Digital Signatures
Last month’s article discussed some of the issues surrounding electronic
signatures generally. That prompted several questions regarding electronic
signatures supported by public key infrastructure (PKI), which are
commonly referred to as “digital signatures.” Carrie Valladares, an attorney
in Preston’s Electronics in Commerce group, volunteered to tackle that
subject this month.
Holly K. Towle is a
partner with Kirpatrick &
Lockhart Preston Gates
Ellis LLP (K&L Gates), an international law firm,
and chair of the firm’s E-merging Commerce
group. Holly is located in the firm’s Seattle
office and is the coauthor of The Law of
Electronic Commercial Transactions (2003,
A.S. Pratt & Sons). Holly.Towle@KLgates.com,
206-623-7580.
Practitioner’s Perspective appears periodically
in the monthly Report Letter of the CCH Guide to
Computer Law. Various practitioners provideindepth analyses of significant issues and trends.
What Is a Digital Signature?
As noted last month, a “digital signature” is one kind of electronic signature.
But what kind?
The term references technology that presents one of the most secure methods
of electronic signature currently available, although it is not foolproof. The
technology is based on a system called “public key cryptography.” A user
is issued two “keys,” one private and one public. The keys are really two
numbers related by an algorithm such that it is generally impossible to
deduce one key from knowledge of the other (assuming that the keys are
long enough and there are no defects in generation of them). To “digitally
sign” a document, a party attaches his or her private key, stored on either
a secure computer or a smart card, to the document. The document is then
reduced into a “hash” (a numeric representation of the original document
made shorter through application of a “hash” function or algorithm), which
is encrypted. The “hash” is sent off to the recipient. The recipient, who has
access to the sender’s public key through a website, a certificate or an email from the sender, attaches the public key to the hash, which is then
decrypted. Because the public key can only decrypt a message signed by
the corresponding private key, and because the hash value would change if
the document were tampered with, the receiver knows that the document is
unchanged and was signed by the holder of the private key.
Where Do the Keys Come From?
Typically, keys are issued by a “Certification Authority” (“CA”) who
conducts varying degrees of checks to verify user identities. Before relying
on the signature’s authenticity, the recipient of a message containing a digital
signature must contact the CA to verify that a certificate issued with the
sender’s key has not expired or been revoked. The trick here is that the CA acts
pursuant to its own “Certificate Policy” or contract, which can be very long
and detailed and may or may not be appropriate for the kind of transaction in
which the keys are being used (e.g., the policy might be for transactions under
$10,000 and not involving real estate; the policy will also limit the liability of
the CA). Also, at least Washington State’s digital signature law only governs
CAs licensed by the state and, at present, there is only one of those. In short,
this is not really as simple as it appears (if it does, in fact, appear to be simple).
CCH GUIDE TO COMPUTER LAW
What Law Governs PKI Digital Signatures?
There is no generally applicable law: PKI digital signatures
are primarily technology-based protection. A few states do
have digital signature statutes, e.g., Washington and Utah.
A section of the American Bar Association issued lengthy
unofficial “Digital Signature Guidelines” that are commonly
consulted but do not have any legal effect. As for federal law,
the Electronic Signatures in Global and National Commerce
Act (E-Sign) generally prohibits states from favoring
particular technologies, although E-Sign should not prohibit
digital signatures. In short, the use of digital signatures is not
an area with developed legal authorities, which results in
some risk and uncertainty.
Are All Digital Signings the Same?
CAs vary in both reliability and verification due diligence, so
anyone relying on a digital signature (whether the person is
signing or receiving the document, assuming each wants an
enforceable document) will typically want to take a hard look
at the CA and its policies or contract. Some applications for
a certificate available online are intended to “sign” or verify
almost any digital data, including a web page, web form, XL
data, XML form and so on. An applicant who can supply
a typed name and email address can get a certificate from
some of these online CAs. This kind of certificate issuance
procedure is of limited value because it may only verify a
machine instead of a person, i.e., it may prove that someone
was sitting at machine X who signed document Y, but that
is not the same as being able to prove who the signer was at
machine X.
What Kinds of Issues Are Raised by the Small
Print of a CA’s Certificate Policy or the Law?
Under Washington law, the recipient of a digital signature
assumes the risk of forgery “if reliance on the signature is not
reasonable under the circumstances.” See e.g., RCW 19.34.310.
To figure out what that might mean (in Washington or by
analogy elsewhere), senders or recipients should at least
examine the CA’s policy/contract to determine what the
CA believes to be reasonable. Such examination will often
reveal that the certificate is inappropriate for the transaction
in question. This is because CAs do not have one-size-fits-all
certificates or polices and the parties must attempt to match
what the CA does provide to their circumstances. More often
than not, there will not be a match.
As a result, persons desiring to use a digital signature should
at least ask about the following: is there a certificate that
matches the value and type of the transaction in question; are
the steps necessary to obtain the certificate more inconvenient
than simply signing by hand or electronically with some
other system for verifying the signors; are the parties capable
of complying with the procedures necessary to deal with
the certificate; are third parties impacted by the transaction
willing to rely on a digital signature or will its use be treated
by them as insufficient; and does the CA’s policy/contract
appropriately address the risk of the transaction involved?
NUMBER 284
To illustrate, if the seller of real property digitally signs a deed
and a forgery nevertheless occurs (e.g., an ex-spouse who knows
the signor’s password, steals and uses the signor’s smart card),
is a payment of an amount from the CA (which will likely be
very limited under the CA’s terms) the remedy desired by the
buyer? The deed will be invalid (i.e., the buyer will not become
the owner of the property) and the payment will typically be
less than the value perceived as lost by the buyer. In fact, it is
more likely that the payment won’t even be due if the CA’s
certificate was designed for non-real estate transactions.
Is a Digital Signature Binding?
Washington law expressly allows a digital signature to satisfy
a “signature” requirement, but only if certain conditions are
met. For example, the digital signature must be verified by
the public key issued by a licensed CA; the signature must
have been affixed with the intent to sign (this is true under
traditional signature law as well); and the recipient of the
signature cannot be on notice that the signer: (a) breached a
duty as owner of the private key, or (b) was not authorized to
use the key. In short, simply because a digital signature is used
does not mean that it is automatically valid as a matter of law.
What Safeguards Can Be Taken if Digital
Signatures Are Used?
The central point is that digital signatures are not simple.
Nevertheless, in some circumstances they can save significant
time and money. Parties using digital signatures may wish to
consider some basic steps to mitigate some (but not all) of
the risks:
• Check that the Certificate is current. Certificates can
expire. Depending on the CA and jurisdiction, it may be
necessary to renew the certificate.
• The receiver must contact the CA to verify that the
signor’s key remains valid. Although some programs
alert the recipient if the key has expired, they might not
notify the recipient that the key has been revoked or
suspended.
• The holder of a private key must exercise some level of
care in maintaining its confidentiality. Under Washington
law, for example, "due care" is required.
• Proper maintenance of a private key is especially
important in Washington, where, for example, a signature
affixed with a person’s private key is presumed to be
the signature of the key owner and to have been affixed
with the intent of the key owner to sign. Although
the presumption can be rebutted, that will not always
be possible. It’s a bit like having a dog: don’t get one
unless you can take really good care of it and can train it
appropriately - or it may bite you.
• Consider engaging a date-time stamp service. In the
event that a key is stolen, the service is intended to
CCH GUIDE TO COMPUTER LAW
enable the user to identify documents fraudulently
signed. Date and time stamps also help to avoid
problems with time-sensitive communications, for
example, orders to purchase an item issued just prior
to a rise or fall in the price.
NUMBER 284
The above is not a complete list of issues that should be
considered in using digital signatures, and the pros and cons
of their use differ with transaction types and users. Digital
signatures do, however, provide alternatives that can be
useful in several types of transactions.