Web-based e-signature vendor acquires patent license

Yozons recently signed yet another licensee to the Yozons '079 patent. We expect more to come as vendors realize the reach of our patent's web-based, secure document delivery and optional electronic signature system and method, and support and acknowledge how Yozons has changed the landscape from a user-controlled PKI-based signature model to a lighter-weight server-controlled signature model.

This U.S.-based competitor develops and operates various web and mobile apps, and negotiated a patent license that fits their particular needs and ensures their thousands of daily clients are protected when using their online document signature service.

While the negotiations lasted over a month, we applaud the decision they reached after discussing the details with their attorney.  Because they were quick to understand the depth of our patent and how it applied to their technology, we were able to negotiate favorable terms.  Yozons prefers to have competitors so long as we are compensated for our invention that has created a healthy marketplace for web-based document processing services throughout the United States.

Their e-signatures service is typical of competitors who make use of our patent's teachings:

1. Documents are stored online in a centralized server.
2. Documents are transferred between parties securely, typically over HTTPS, in order to effect secure document delivery that ensures the privacy of the business communications.  HTTPS makes use of a traditional PKI in which the browser uses the web server's SSL digital certificate to establish a secure link using the web server's asymmetric public key, and then generates a unique symmetric encryption key that's shared only between the user and the server for the purpose of encrypting the document and related data transferred over that link. But the key is that previously, end-users created and exchanged their own keys, as well as performed their own encryption and digital signatures.
3. The entire process makes use of a web application, giving them the ability to communicate and e-sign with a myriad of devices connected over the Internet, including PCs, start phones and tablets.
4. The e-signing ceremony typically involves typing their name, drawing their signature or clicking in the relevant areas to indicate their agreement.
5. Typical routing of documents is handled using the e-mail address of the parties involved, generally sending a unique ID that links the user to the correct document and party in the online process.  Some users, typically customers of the service, authenticate using traditional username and password, and can initiate transactions, track them, download completed agreements, etc.
6. Users can add their electronic signatures quickly and easily, without requiring special client-side software, digital certificates, and/or key management.
7. The server provide an audit trail including IP addresses and timestamps.

A quick overview of the general breadth of the Yozons '079 patent, which has been practiced by Yozons since 2001, can be found in its FIELD OF INVENTION:

In general, the present application relates to computer software, hardware and communication networks, and in particular, to a system and method for securely processing digital documents, including appending digital signatures, without requiring pre-established individual identity verification, digital certificates, end-user cryptography, key management or key exchange.

PKI Digital Signature company acquires patent license

In a prior blog posting about our patent licensee who is in an unrelated marketplace of instant income verification, we discussed much about how patent law works.

Today, we will discuss a "tangentially related" competitor in the marketplace.  In the European Union (EU), so-called "advanced" electronic signature laws tend to favor solutions built on public key infrastructure (PKI), just like myriad antiquated U.S. state laws prior to the U.S. E-Sign Act of 2000.  Adoption of electronic signatures has suffered in the EU because such solutions are harder to deploy, just as they are in the U.S.

The EU has an advantage in that many of its countries are much smaller than the U.S., and they are able to roll out government-based electronic IDs that are built around a PKI.  This more closely mirrors how our states are able to issue driver's licenses, though no state offers an eID.  Of course, the EU still suffers with interoperability across national boundaries and other issues in this regard, but the U.S. is unlikely to adopt a federal eID anytime soon as we've never had a national ID.

Our recent patent licensee is a software vendor in the United Kingdom that offers a PKI-based server platform with a web front end for the purpose of electronically signing documents.

While they make use of a PKI, their web users in particular are able to effect electronic signatures built on digital signatures on the server alone, without the users on their web browsers having to download software, generate/manage encryption keys, exchange keys, etc.  Under that scenario, our patent came into play, and so they purchased a license that covers both their server product and the web-based front-end product that is also operated as a service (SaaS, web site).

With the patent license, the company, its investors and all of its customers are fully protected. That's a smart business decision.

We were able to negotiate a fair one-time royalty on favorable terms to them because they approached Yozons and concluded a license agreement quickly and professionally.   Naturally, royalty rates are higher for those who do not willingly purchase a license, with the highest rate for those who must be sued into compliance.

Instant income verification - a Yozons '079 patent licensee

Some customers of Yozons have never used our technology and services directly, though many thousands have.

Nor have these customers necessarily used us through a reseller.

No, these customers are licensees of the Yozons '079 patent -- U.S. Patent No. 7,360,079 -- and they protect their businesses and investors, and more importantly, protect the interests of their customers by purchasing a license at a fair royalty amount.  We offer two tiers of patent licenses: 1) for those who use our patent in non-competitive markets; and 2) for those who are competitors and have directly built their businesses on top of our intellectual property.  We offer paid-up licenses as well as revenue-based royalties.

A recent example of such a patent licensee is a company in California that offers instant income verification, primarily for mortgage lenders.  Using its own web-based technologies, our licensee is able to review an applicant's tax returns, paystubs and bank statements by getting appropriate authorization online.  This then allows them to provide instant delivery of the applicant's income rather than waiting even one or two days, all with tax confirmation provided directly from the IRS.

Intellectual property laws can be complex, but patent law is pretty straightforward in that those who make use of the teachings of a patent are infringing even if they've never heard of the inventor or the patent before.  As the Yozons '079 patent was filed in 2002, an infringer today could easily have accumulated 12 years of ongoing infringement.

Even if you don't know you are infringing on a patent, you are legally responsible and can face damages if you do not remedy the situation.  If you do know about a patent and are found to infringe, it becomes willful and you become liable for treble damages (3 times the amount) and reimbursement of all legal expenses incurred by the patent owner to bring you into compliance.  Several direct competitors fall into this camp.

More confusing is that even if you are a customer of another product or service, and the vendor who offers it infringes on a patent, you also infringe it.  It is Yozons' belief that millions have infringed our patent using competing technologies as well as unrelated technologies that perform web-based electronic signatures and secure storage in which the keys and encryption are managed by the server rather than the parties themselves as was the industry norm before the '079 patent.

Of course, Yozons does not generally bring legal action against people regarding it's patent, but those who likely do infringe and refuse to purchase a license do set themselves and their customers up for a willful patent infringement lawsuit in federal court. Attempts to defend yourself can be very expensive, often costing $100,000 just to reach a first round settlement.  Most find that if there is sufficient reason to believe you may infringe, it's often dramatically cheaper to acquire a license than to fight it in court. Even if you win the lawsuit, you'll likely have spent considerable money and time on top of being compelled to divulge lots of private information via interrogatories and "requests for production" including software code, design specification, customer lists, revenue models and financial statements going back years.

Smart vendors protect their interests and the interests of their customers by acquiring rights to our '079 patent rather than leave themselves and their customers vulnerable.

Yozons offers a reasonable royalty program that provides a fair price for use of our important patent.  If you think you may infringe, we hope you do the right thing and join our many other patent licensees.