WO2002025400A2

WO2002025400A2 - A method and system providing a world e-commerce exchange

Info

Publication number: WO2002025400A2
Application number: PCT/US2001/028969
Authority: WO
Inventors: J. Steven Manolis; Linda Milligan-White; Bala Madarajah
Original assignee: World E-Commerce Exchange
Priority date: 2000-09-19
Filing date: 2001-09-17
Publication date: 2002-03-28
Also published as: CA2422185A1; WO2002025400A3; AU2001289112A1

Abstract

A world e-commerce exchange system includes a computer-based e-commerce exchange residing on a network server and facilitating on-line transaction between registered members by bringing the members together on-line and, upon the members agreeing to complete a transaction, transmitting executed contracts to the members, with the exchange protecting the members by using electronic signatures to confirm member identification, by providing guarantees of contract performance, and by monitoring on-going transactions as to transaction type and ownership issues.

Description

A METHOD AND SYSTEM PROVIDING A WORLD E-COMMERCE EXCHANGE

BACKGROUND OF THE PRESENT INVENTION

Generally, the present invention relates to the field of electronic commerce ("e-commerce") over computer networks, the computer networks being used to support e-commerce transactions.

More specifically, the present invention relates to facilitating on-line electronic transactions through the use of a computer-based e-commerce exchange to bring together screened buyers and sellers in a known and regulated environment. The invention takes the form of a system, a method, a recorded program product and a carrier wave.

DESCRIPTION OFTHERELATEDART

The Internet has the potential to become an active marketplace revolutionizing retailing by allowing consumers buy a wide variety of products and services from remote sources while remaining in their homes or offices.

However, consumers, both businesses and individuals, are wary of conducting business electronically over computer networks, including the Internet, due to recognized fraud risks and unsettled legal issues relating to e-commerce and commerce with parties in different legal jurisdictions.

The prior art has successfully placed sites on the Internet which offer goods for sale. However, the prior art has not resolved many of the risks associated with the Internet and other network e-commerce.

For example, Internet commerce exposes transacting parties to fraud risks. Fraud risk issues include: verifying the identity of the parties to the transaction; accessing the quality, authenticity (i.e., genuine and not counterfeit goods) and true ownership of the goods being offered; avoiding credit card fraud; and ensuring that the obligations of the transaction are fulfilled by finally transferring and shipping the purchased goods.

Internet commerce also exposes transacting parties to legal uncertainties. Currently, web sites do not offer a predictable legal environment governing transactions and do not adequately deal with inter-jurisdictional and multi-jurisdictional legal issues. These include sales tax, custom duties, excise taxes and rules, language barriers, fear of fraud and lack of infrastructure to handle international orders.

As a result, parties to Internet transactions are currently unsure of whether legal jurisdiction and laws will be decided by the location of the seller, the location of the buyer, or even the location of the web site server where the electronic interaction occurred. This has caused many e-commerce vendors to turn away customers, especially international customers.

Thus, notwithstanding the potential of the Internet for e-commerce, there continues to be reluctance to engage in commerce on the Internet on both the business-to-business and the business-to-consumer levels.

OBJECTS OF THE INVENTION

An object of the present invention is to overcome some of the disadvantages of the prior art systems by providing a computer-based e-commerce system that functions as a global marketplace for goods, other products and property (including but not limited to financial instruments and securities) and services (collectively, "products") in which e- commerce is conducted in a trusted, secure, predictable and efficient environment between trading members of an exchange (the "exchange"), being a body corporate specifically authorized and recognized by statute to conduct such an exchange, where such trading members, located in the United States or elsewhere ("trading members"), by entering into a membership agreement with the exchange, are subject to the standards of business conduct, practices and processes of the exchange prescribed by its rules.

Yet another object of the present invention is to provide an e-commerce exchange on which contracts for transactions between trading members can be formed electronically with certainty as to the identity of the other parties and as to the rules and regulations governing the transaction and the contract and any disputes arising from the transaction or the contract.

It is a further object of the present invention to provide a novel e-commerce exchange system which facilitates on-line e-commerce transactions between screened and registered trading members of the exchange by providing a network connected computer server (meaning one or more physical computer servers) hosting network operations of the exchange under agreed-upon regulations.

It is yet a further object of the present invention to provide a novel method of conducting e-commerce transactions in a restricted on-line environment.

It is still a further object of the present invention to provide a novel on-line exchange serving and protecting trading members by guaranteeing the performance of transactions with performance guarantees issued automatically by the exchange system server, where the performance guarantees may be backed by either the exchange or a third party provider.

It is another object of the present invention to provide a novel exchange that protects trading members by transmission of electronic signatures confirming member identification.

It is yet a further object of the present invention to provide a transaction monitor residing on an exchange server monitoring on-going transactions and testing the on-going transaction under exchange regulations.

It is yet another object of the present invention to provide a novel means of protection for parties to on-line transactions through an ownership authorization monitor confirming ownership of property relating to on-going transactions. It is a still further object of the present invention to provide a novel method and system which utilizes an ownership authorization monitor to confirm ownership rights relating to trademarks, patents, authorized re-seller agreements, title and liens.

These and other objects and advantages of the present invention will be apparent to those of skill in the art from a perusal hereof.

SUMMARY OF THE INVENTION

The present invention includes a computerized marketplace for products, specially authorized and recognized by statute, hosted on at least one network-connected computer server for the purpose of facilitating on-line e-commerce transactions between screened members of an exchange in a secure environment under agreed and/or known legal conditions.

The invention provides a network server hosting processes which ensure that those participating on the exchange will find the exchange a trusted, reliable and secure¹ site on which to conduct business. The processes include input of an electronic signature by the trading member and a determination of the eligibility of the trading member by records maintained at the exchange host server; monitoring of the suitability of the items offered for sale on the exchange; limiting offers for sale to only those trading members who can affirmatively establish that they are the owners of, or have the legal rights to deal with, a product or service; screening membership of trading members; and providing financial and performance guarantees protecting individual transaction contracts executed on the exchange.

Screening membership prevents a counterfeit manufacturer or an unauthorized dealer of branded products from gaining trading membership or being permitted to trade such products on the exchange. Screening membership requires that trading members, prior to becoming trading members and/or on an on-going basis as part of individual transactions or trading sessions, agree to trading standards in order to create a safe, secure, and predictable trading environment so that e-commerce can be conducted between parties from multiple jurisdictions without undue regulation in an environment that minimizes business risks.

The invention brings trading members together in "virtual conference rooms," "portals," or "silos," where they electronically conduct e-commerce transactions and form enforceable contracts. After the transaction has taken place, the buyer may be linked into a "sub-conference room" or "sub-portals" where complementary value-added services such as performance guarantees are available.

To promote further security, the invention provides classes of trading members, who may comprise vendors, buyers and end-users of a wide spectrum of products bought and sold through the exchange.

BRIEF DESCRIPTION OF THE DRAWINGS

Figure 1 is a block diagram of a preferred embodiment of the present invention;

Figure 2 is a block diagram of a preferred embodiment of the present invention showing computer modules distributed on plural servers;

Figure 3 is a diagram of a preferred embodiment of the present invention showing plural servers and databases;

Figure 4 is a depiction of the present invention showing application vetting and admission to the exchange;

Figure 5 is a flow chart of a preferred embodiment of the present invention;

Figure 6 is a view of an industry silo with connected buyers and sellers;

Figure 7 illustrates a typical exchange system;

Figure 8 illustrates a preferred "Click-Through" embodiment of the present invention; Figure 9 illustrates an interface for a preferred "Click-Through" embodiment of the present invention;

Figure 10 illustrates a flow of information between another web site and the web site of the exchange in a preferred "Click-Through" embodiment of the present invention;

Figure 11 illustrates an embodiment in which a buyer and seller negotiate an agreement using the exchange of the present invention;

Figure 12 illustrates an embodiment in which escrow information can flow in a negotiation begun on another web site and concluded on the web site of the exchange in a preferred "Click-Through" embodiment of the present invention; and

Figure 13 illustrates an embodiment in which performance guarantee information flows in an embodiment of the present invention.

DESCRIPTION OF PREFERRED EMBODIMENTS

With reference to Figures 1 and 2, an embodiment of the present invention is an e-commerce exchange 10 facilitating on-line e-commerce transactions 20 between screened and registered trading members 30, the trading members interacting via computer screens 35.

The exchange comprises a set of computer modules 40 residing on at least one computer server 50 connected to a computer network 60 and hosting the network and other operations of the exchange. Through the server(s) operations and the network inter- connectivity, the exchange brings its trading members 30 together in real time in an on-line commerce setting.

Although the exchange may be hosted on one or more servers 50 which are physically co-located, such co-location is not necessary. Advantageously, the servers 50 need not be hosted at a single site and may be interconnected via a computer network 60. The exchange system may be operatively connected to one or more networks 60 simultaneously. The computer network 60 may either be a private network or a public network, e.g., the Internet. Additionally, trading members 30 may direct dial into the exchange 10.

Thus, the invention is operative to facilitate on-line transactions between screened and registered trading members regardless of how the on-line connection between trading members and the exchange is effected. Further, the invention is scalable, operative to facilitate transactions on a single hosting server 50 and a single connecting network 60 (e.g., the Internet), and expandable to distribute operations of the exchange over plural servers operating independently over plural connecting networks.

Whether on a single server 50 or plural servers 50, the exchange brings its trading members together on-line and, upon trading members agreeing to complete a transaction 20, the exchange transmits executed contracts 70 to the applicable trading members 30.

More particularly, upon two trading members agreeing to complete a transaction, that agreement results in an executed contract 70 being developed from documentation databases 80-89 residing, either permanently or transiently, on the server(s) 50 (see Figure 3). The exchange then transmits the executed contract documents on-line to the applicable trading members. The contract can be embedded or in a standard format including XML, HTML, Microsoft Word or Microsoft EXCEL. It can consist of multiple documents which can be added to, but cannot be deleted by a trading member. All documents are time-stamped, have multi-user access and are printable. However, subject to applicable law and the rules of the exchange, documents will not be released to other members of the exchange without the consent of the contracting trading members.

The exchange provides a secure and predictable transaction environment through a number of features. One feature of the exchange is that it operates under express authority and pursuant to a government statute. The authority is stored in the exchange in an authority database 80. The authority database may be in the form of rules which control procedural and legal operations of the exchange.

Another feature of the exchange which provides security is that access to the exchange, and accordingly the ability to enter into transactions, is limited to registered trading members. Applications for membership may be made via network access. See Figure 4 indicating that the network may include buyers, sellers, end-users, and service providers.

In some embodiments of the invention, membership maybe at plural levels or classes. For example, certain registered trading members may be shareholders in the exchange. This ensures that these trading members have a vested interest in the success and integrity of the exchange as well as a voice in the operations of the exchange. As another example, members may be organized in classes according to their industry sector or the nature of the products in which they trade.

Some classes of trading members are eligible to apply for an exchange domain name. See slOO of Figure 4. The exchange domain name may be associated with a unique top-level domain (i.e., at the same level as "org," "com," "us") or may be a unique or semi-unique lower level domain (e.g., "xyz.com," "xyz.us," "xyz.bm"). Examples of top-level exchange domain names would be "companyl.exe," "company2.exe," and "company l.eex," where ".exc" is an abbreviation for "exchange" and ".eex" is an abbreviation for "e-exchange." Examples of lower level domain names would be "company l.exc.bm," "companyl.eex.bm," and "companyl.wx.bm," where " wx" is an abbreviation for "world exchange" and ".bm" is the top level domain for Bermuda. These examples are of course only examples and are not limiting. hi all embodiments of the exchange, prospective trading members complete an application for trading membership (slOO of Figure 4). Applications undergo a vetting process (si 05) in which domain name applications are considered under a first set of rules (si 10) and applications for membership (sll5) are passed to be considered in si 20 under a second set of rules (sl25). The domain name rule set 81 and the membership rule set 82 are also maintained on a server. Note that while a particular server (server-D) is indicted in Figure 3, any server or a single server may host the data rule sets.

By the rule sets being hosted on the exchange server 50, the exchange comprises expert systems modules 40 which evaluate applications for membership under a rigorous rule set which may include heuristics and may be updated easily within additional rules. Thereby the application process is known, rigorous and readily updatable with new criteria that becomes appropriate.

Trading membership qualifications can be set up as needed and may include such items as financial security, credit worthiness, risk analysis based on prior litigation and/or complaints, etc.

In an embodiment, the exchange requires that certain classes of trading members are admitted to membership of the exchange only with financial bonding. The nature of the financial bonding, the amount and other related financial bonding information is maintained with the exchange as data records 83 stored in the exchange server 50.

To provide legal certainty, all membership agreements will be governed by the laws of a particular jurisdiction. In addition, trading members contractually agree that the on-line transactions and the corresponding contracts are formed in a particular legal jurisdiction and are subject to laws of that particular legal jurisdiction. The membership agreements are also recorded on the exchange, e.g., as electronic database records, or as digitized documents 84. Agreeing to legal jurisdiction and operating the exchange pursuant to an enabling statute may enable the exchange to be operated in a business and tax favorable manner.

The agreement of a trading member as to legal jurisdiction need only be recorded a single time; however, in some embodiments, the agreement may be updated or re- acknowledged each time the trading member accesses the exchange or forms a pending contract. This may be accomplished by the exchange including a log-on screen requiring trading members to confirm agreement that the on-line transactions and the corresponding contracts are formed in, and governed by the laws of, the particular legal jurisdiction. The update confirmation is recorded on the exchange.

Through the exchange requiring trading members to agree a priori to legal rules, trust and confidence in the exchange and the contracts formed on the exchange is established. The exchange system being operated pursuant to a known statute may also increase confidence. The governing statute, from which authority rules 80 are derived, may provide that any trading member which is a company is not deemed to be engaging in or carrying on a trade or business in the jurisdiction by reason only of being a trading member or conducting commerce on the exchange. The statute, and the exchange rules derived therefrom, may include other such legal assurances.

In a preferred embodiment, the exchange operates under The World E-Commerce Exchange Company Act, 1999 of Bermuda (the "WECX Act"), which, inter alia:

(a) authorizes the formation of The World E-Commerce exchange ("WECX") by filing a memorandum of association under the Companies Act 1981 of Bermuda;

(b) authorizes and empowers WECX to:

(i) create and facilitate markets for electronic commerce fransactions conducted by WECX members through WECX; (ii) supervise, manage and control electronic commerce transactions conducted through WECX;

(iii) admit and discipline members of WECX;

(iv) certify electronic signatures;

(v) investigate the credit of its members;

(vi) issue and authenticate electronic records of transactions conducted through WECX;

(vii) establish registries for members of WECX;

(viii) provide for dispute resolution;

(ix) determine whether a particular type or class of electronic commerce transaction may be conducted through WECX;

(x) enter into joint ventures, partnerships or other contractual arrangements to facilitate the operation of its business;

(xi) provide services to its members;

(xii) guarantee and assist in the performance of contracts;

(xiii) satisfy or compromise claims made against WECX or its members;

(xiv) set fees payable by WECX members for use of the facilities and services of WECX;

(xv) make regulations which provide for the types of electronic commerce transactions which may be conducted through WECX, the form and manner of execution of electronic commerce transactions effected through WECX, encryption and security standards and procedures, entry into and termination of frading membership, disciplining of members, confidentiality of information relating to WECX and its members, conflict resolution and other powers; and

(c) instructs WECX to comply with the provisions of the Electronic Transactions Act, 1999 of Bermuda, which provides a favorable legal environment for the conduct of e-commerce transactions.

The fiill text of the WECX Act is incorporated herein by reference.

Although trading members agree to a legal jurisdiction and other mentioned legally- binding rules, in some embodiments these agreements are default rules. That is, trading members may opt-out of the default agreements by indicating such a preference on an appropriate trading screen and having the corresponding frading member agree to the opt-out. The trading members would then agree to another trading screen-produced available legal jurisdiction or rule set, or may agree to a legal jurisdiction which is not established by the exchange.

With reference to Figure 13, additional confidence in the exchange is established by the exchange providing the option of contract performance guarantees. Performance guarantees provide trading members with insurance against non-performance by counterparts on a range of factors from delivery date, specifications, quality and quantity. The performance guarantee service desirably is available to all trading members who elect to qualify for a second level of vetting that results in their eligibility for a performance guarantee insurance bond. This will be offered through a joint venture between the exchange and a desirably major international insurer who will lead a syndicate of cross-border reinsurers. It is believed that performance guarantees will lower purchasing costs for buyers and broaden markets for sellers. It is also believed that this feature will be particularly important in the cross-border internet auction business of the exchange and in particular, facilitate suppliers in less developed countries transacting with buyers in more established markets.

The performance guarantees provided by the exchange may take several forms. A performance guarantee election module 40 offers to trading members a performance guarantee option screen. The screen offers both default and optional performance guarantees. Default options may include reliance on trading members, bonding, the exchange's established conflict resolution for trading members (which may include on-line electronic arbitration), and contract performance insurance backed by a third party insurance company.

Trading members may rely on one of the available default assurances or may elect an optional performance guarantee. In any event, the exchange, upon the trading member making an election of performance guarantee, electronically transmits the performance guarantee information to the applicable trading members involved in the transaction. This transmission may be concurrent with the formed contract transmission or may be separate with an associating link to the formed contract. If a performance guarantee is elected, the performance guarantee transmitted by the exchange to the trading member includes an indication of the issuer of such guarantee. In these ways, trading members are confident that the exchange system guarantees performance of executed contracts.

With reference to Figure 12, in another embodiment of the present invention, the exchange will offer trading members the option of an on-line escrow service whereby payment is released to the seller trading member only when the buyer trading member has inspected and accepted the seller trading member's merchandise. If the buyer trading member refuses to accept the merchandise because it is not in conformity with its order, payment is returned to the buyer trading member after the seller trading member inspects and accepts the returned merchandise. Either the buyer trading member or the seller trading member begins the transaction by providing terms and information about the merchandise. Both parties must accept the terms of the agreement for the transaction to proceed. The buyer trading member then submits payment to an on-line escrow service where it is verified. The on-line escrow service then secures the payment in its trust account and notifies the seller trading member that the buyer trading member's payment is securely held in escrow. The seller trading member then delivers the merchandise to the buyer trading member. The buyer trading member decides to accept or reject the merchandise within an inspection period agreed to by both parties. If the buyer trading member accepts the product, the on-line escrow service releases the funds to the seller trading member.

In other embodiments of the present invention, the exchange will offer members additional ancillary services, provided by the exchange or by arrangement with third parties, to facilitate transactions on the exchange. Such services may include, without limitation, trade finance and international clearance and settlement.

Although the exchange system permits members flexibility of access, security is maintained, e.g., by allowing a trading member (via a client computer operatively connected to the exchange log-on eligibility module 40) through the Internet to complete and transmit log-on data via a log-on screen 35 from the trading member's computer to the exchange server 50. The trading member log-on data transmission may include an electronic signature confirming the identification of the frading member. This log-on transmission avoids the requirement for a conventional physical or "paper signature." In this regard, the invention operates pursuant to a statute that recognizes contracts executed by electronic signature and such contract-forming rules are included in the exchange databases. Advantageously, such contracts are binding in the agreed-to jurisdiction and would be recognized by the courts of the jurisdiction.

The exchange system log-on module may work together with an eligibility module 40. In making the determination of the eligibility of the trading member to log on to the exchange, the eligibility module accesses server records concerning credit authorization, transaction alerts, pending transaction status, and frading member status. hi an embodiment of the invention, the exchange system eligibility module also makes the determination of the eligibility of the trading member to log on to the exchange by accessing server database records 88 concerning trading member status as to each of vendors, buyers and end-user trading members.

Trading members, including those who may not be shareholders, have a vested interest in the exchange maintaining its viability and trustworthiness. Accordingly, trading members accept and co-operate with the monitoring of transactions by the exchange. One form of monitoring is performed by a transaction monitor module 40 residing on the server 50 which monitors on-going transactions. The monitor module, prior to permitting the exchange to transmit executed contracts, tests the on-going transaction for approval, disapproval, refusal, withdrawal, suspension and cancellation according to predetermined regulations of the exchange. These rules may be part of the authority database 80 or may be a separate monitoring rules database 85.

Assuming the monitoring module 40 approves the transaction, upon the trading members agreeing to complete a transaction, in addition to transmitting executed contracts to the trading members, the exchange executes a memorialization module 40 to record the transaction in the form of an elecfronic record in, e.g., a record database 86. The memorialization module 40 also checks the transaction as possibly being an acquisition, a sale, a license or an advertising agreement, recording the transaction type. This arrangement, together with the other exchange provisions, provides for the formation of enforceable contracts without paper or traditional signatures.

In addition to monitoring the type of transaction, the exchange system may include an ownership authorization monitor module 40 residing on the server 50. The ownership authorization monitoring module confirms ownership of property relating to ongoing transactions prior to permitting the exchange to transmit the executed contracts. The ownership confirmation monitoring module confirms ownership of property relating to each of trademarks, patents, authorized re-seller agreements, title and liens. Data relative to ownership may be provided via screen input, scanned input or other means and may be stored in an ownership database 87.

The invention also takes the form of a method of performing on-line transactions via a commerce exchange residing on a server computer. The invention provides that a first trading member enters into an on-line transaction with a second trading member via network portal 90 (Figure 3).

With reference to Figure 5, the method of the invention begins with a first trading member contacting the exchange via a computer network (step s501). After contacting the exchange, the first trading member must enter the exchange via a log-on screen (step 502) with features as disclosed previously.

Once within the exchange, the first trading member contacts a second trading member. The contact of a second trading member can take any of several forms. The first trading member may log on to the exchange at a server dedicated to a particular second trading member (in which case the network portal takes the form of the web address for the dedicated network server hosting) or may contact a second frading member via a selection screen offering several member groups (industry groups). Each industry group may be broken into an industry "silo" as shown in Figure 6.

The invention uses the term "industry silo" to convey that within a given industry, many levels of products may be available under a number of conditions. For example, sellers 601 may each offer products related to the given industry. Service providers 602 may offer services related to that industry. Buyers 603 enter the industry silo 604 looking for product offerors. In the case of some transactions, the seller and buyer trading members interact one- on-one dynamically in real time.

An example of such an interaction would be within a transportation industry silo where a prospective new car buyer contacts an auto dealer seller. Upon the auto dealer being notified, by for instance an on-line activated "You have a customer" verbal message, an auto sales agent engages the new car buyer on-line via the exchange to determine the new car buyer's requirements and makes sales offers.

Upon the first trading member (the new car buyer) agreeing to complete a transaction and forming a pending transaction with a second trading member (the car sales agent), the exchange forms a completed transaction contract by sending the first trading member and the second trading member an executed contract.

The car sales agent readily deals with the new car buyer as the method of the invention includes a verifying step which pre-screens the buyer prior to connecting the buyer to the seller. More specifically, the exchange verifies the eligibility of a frading member to log on to the exchange and enter into the transaction by screening the trading member as to credit authorization, transaction alerts, and pending transaction statuses prior to completing the trading member log-on process.

Once the initial completed transaction contract is formed by the exchange sending the executed contract to the frading members, the first trading member (the new car buyer) may be made aware of "value chains" (i.e., related products and services available through the exchange) 605 associated with a new car purchase. The value chains 605 may include new car insurance, new car accessories, and prepaid maintenance. The sellers 601 associated with the value chains need not be the car sales agent and may be other trading members.

Advantageously, the method of the invention allows the first trading member to contact and enter the exchange via a World Wide Web browser application, where the first and second frading members communicate with the exchange (in particular the server computer 50 of the exchange) and with each other over the Internet.

The step of logging on to the exchange (s502) includes, as disclosed above, that the trading member agrees, prior to entering into the exchange, that the exchange operates under express authority and pursuant to a particular government statute and particular rules controlling operations of the exchange. hi the auto buying example, the first trading member is confident in the transaction knowing that the method of invention requires that the seller (the new car dealer), in logging on to the exchange, is subject to the exchange verifying that the seller is a currently registered trading member admitted to membership in the exchange with current financial bonding and good standing.

Both parties to the car sales fransaction are assured because each knows that the other has acknowledged, on-line, an agreement that the transaction and the corresponding completed contract are formed in a particular legal jurisdiction and are subject to laws of that legal jurisdiction. The parties also trust the exchange and the transaction as the exchange rules require that the agreements of the parties as to both legal matters generally and the executed fransaction in particular are memorialized by the exchange in a database file, e.g., files 80-89.

In addition to the exchange providing certainty as to legal jurisdiction and related matters, the method of the invention lets the seller enjoy this legal certainty with only limited legal presence in the jurisdiction. That is, the method of the invention may include providing the second frading member (the auto seller) with an on-line assurance that a frading member is not deemed to be engaging in or carrying out a trade or business in the legal jurisdiction by reason only of being a trading member or conducting commerce on the exchange. As to the auto buyer, after agreeing to the on-line fransaction, the exchange method provides the auto buyer (the first trading member) with the option of an on-line guarantee of contract performance.

The frading member who is a buyer is also protected under the invention as some embodiments of the invention include a step of requiring that any offerer trading, member must provide on-line proof of ownership of the property. This proof may talce the form of data previously stored in a server database. The offerer trading members may enter such information into the exchange via a transaction screen which includes ownership data fields for providing ownership information concerning property trademarks, patents, authorized reseller agreements, title, and liens. In an alternative embodiment, information entered into ownership data fields by offerer trading members is referred to a designated third party for verification.

The method of the invention may also provide safeguards such as testing each transaction as to transaction standards. The transaction testing may be performed at any time prior to completing the fransaction by issuing an executed confract, but is generally performed subsequent to the parties agreeing to a transaction when the transaction is pending. The transaction testing of the pending fransaction may be for any of or all of approval, disapproval, refusal, withdrawal, suspension and cancellation under predetermined regulations of the exchange.

For example, in the auto sales example, the testing step may look at the installment sale interest rate being charged. If the interest rate is over that which is allowed, as recorded in the appropriate database file, the contract will be disapproved and the reason noted.

In addition to having the exchange provide frading members with an executed contract, the invention may include a step of providing a memorialization notice recording the transaction as a eatable electronic record. This memorialization notice acts in much the same way as frame and reel numbers in conventional micro-film recording systems as a means of both recording documents and aiding in the later document retrieval.

With reference to Figure 8, in one embodiment of the present invention, a frading member accesses the exchange via the Internet from the web site of a third party on-line exchange which has been accessed by the trading member ("Click-Through").

With reference to Figure 9, in one embodiment of "Click-Through," the system includes a contract negotiation, storage and retrieval system that can be accessed directly from other on-line exchanges and which can store and maintain the contract on the exchange server.

In a preferred "Click-Through" embodiment, trading members of the exchange can use the inventive system as a place to negotiate their contracts before they are digitally signed and stored. This would desirably include a "Click-Through" contract negotiation option with a simple graphic or hyperlink on a third party e-commerce site that will bring the trading member to the present invention's contract negotiation server. Such option can be elected during the posting of a contract from a third party site. An interface would also permit a user to "Click-Through" from another exchange and select the system of the present invention as its contract negotiation situs. Such interface would also permit trading members to agree to submit a previous agreement to the jurisdiction of the system of the present invention, and would further allow a frading member of the exchange to search the system of the present invention for past agreements of such trading member recorded on the system of the present invention.

At the administration level, the interface which administers the "Click-Through" from another on-line exchange would select the system of the present invention as its confract negotiation situs for a given frading member. Such interface would retrieve a previously used negotiation situs in the system of the present invention for a particular frading member and permit the administrator of the exchange to search the system of the present invention for the negotiation situs that the administrator may have previously created in the system for a particular trading member. It would further permit such administrator to search the exchange system for contract negotiation situs and edit contracts with respect to ownership, etc.

In another preferred embodiment of the present invention, third party on-line exchanges are hosted on the exchange. In such embodiment, third party on-line exchanges reside on the computer network of the exchange. The rules of the exchange may include specific provision for such hosting arrangements, including provisions which address the respective application of the rules of the exchange and the hosted exchange to transactions on the hosted exchange. This preferred embodiment of the present invention enables other online exchanges that become hosted on the exchange to obtain the jurisdictional and other legal advantages that may be afforded by the WECX Act.

The invention is also embodied in a carrier wave carried over a computer network to the trading members via the exchange server for performing computer-based on-line commerce transactions between a first frading member and a second frading member as disclosed above.

Other embodiments of the invention for performing computer-based on-line commerce transactions between a first trading member and a second frading member include a commerce exchange computer program product, stored on a computer readable storage medium, which program product when executed on a computer causes a computer server to host the above disclosed exchange and/or causes the performance of the exchange method.

The computer program product of the present invention may include the following modules: a trading member log-on module receiving a frading member log-on data; a trading member transaction execution module engaging a first trading member with a second trading member; and a fransaction completion module to form a completed fransaction by transmitting executed transaction confracts to the first trading member and the second trading member.

The program product of the invention may further comprise a module permitting the first frading member to contact the exchange via a World Wide Web browser application and a module operatively connecting the exchange server to the Internet allowing the first trading member and the second trading member to engage in real-time on-line commerce fransactions.

The program product, in some embodiments, includes a module presenting an agreement screen to the first trading member which requires the first frading member to agree prior to entering into a transaction module that the exchange operates under express authority and pursuant to a particular government statute which forms the rules controlling operations of the exchange. A further module, an acknowledgment module, accepts periodic input from the first trading member agreeing that any on-line fransactions and any corresponding confracts are formed in the agreed-to legal jurisdiction and are governed by laws of that legal jurisdiction. The acknowledgment module itself includes a fransaction assurance module for transmitting to the first trading member an assurance that a frading member is not deemed to be engaging in or carrying on a frade or business in the agreed-to legal jurisdiction by reason only of being a trading member or conducting commerce on the exchange.

Conformance with the rales of the exchange is assured by a testing module testing pending transactions for approval, disapproval, refusal, withdrawal, suspension and cancellation, subject to the various exchange rule sets.

Another module causes the exchange to require on-line proof of ownership of property prior to accepting the property for sale on the exchange.

Screening by the exchange is accomplished by an eligibility monitoring module determining the eligibility of the first trading member to log on to the exchange, where the first frading member is screened as to credit authorization, fransaction alerts and pending transaction status.

The program product may further comprise a module for verifying that the first trading member is a registered trading member admitted to membership of the exchange and is currently in good financial standing with the exchange.

Program modules also execute the exchange's contract performance guarantee program by causing the exchange to transmit on-line to the first frading member a guarantee of contract performance.

In addition to first and second frading members completing a transaction, the invention includes a module which lets plural frading members transact auction-style with an offerer trading member.

The invention provides for the inclusion of a program module causing the computer server to host a completed contract memorialization database. In such a database, upon the first trading member agreeing to a transaction and forming a pending transaction, the completed confract memorialization module transmits to the first trading member a completed transaction contract, records in the completed contract memorialization database a transaction contract record, and provides to the first trading member a database record identification corresponding to the completed fransaction confract.

While preferred embodiments of the present invention have been described, it is to be understood that the invention is to be defined by the appended claims when read in light of the specification and accorded their full range of equivalence, with changes and modifications being apparent to those of skill in the art.

Claims

CLAIMSWhat is claimed is:

1. A world e-commerce exchange system, comprising:

(a) an e-commerce exchange ("exchange") facilitating on-line transactions between screened and registered trading members ("trading members");

(b) at least one computer server operatively connected to a computer network, said computer server hosting network and processing operations of the exchange, wherein the exchange brings frading members together on-line and, upon the trading members agreeing to complete a fransaction, transmits executed contracts to the frading members;

(c) at the election of the trading members party to a fransaction on the exchange, said contracts being formed in a particular legal jurisdiction and governed by laws of the particular legal jurisdiction; and

(d) said contracts of the trading members being recorded in the exchange system.

2. The exchange system of claim 1, further comprising a statute expressly authorizing the operations of the exchange, said authority being stored in the exchange system in the form of rules that control the operations of the exchange.

3. The exchange system of claim 1, further comprising the frading members being shareholders in the entity that owns the exchange.

4. The exchange system of claim 2, further comprising the trading members being admitted to membership of the exchange with financial bonding that comprises data records stored in the exchange system.

5. The exchange system of claim 1, further comprising a log-on screen requiring trading members to confirm agreement that the on-line transactions and the corresponding contracts are formed in, and governed by the laws of, the particular legal jurisdiction, and the confirmation being recorded on the exchange system.

6. The exchange system of claim 1, further comprising the exchange server being operatively connected to one of an open network and a private network.

7. The exchange system of claim 2, further comprising said statute providing that any frading member being a company is not deemed to be engaging in or carrying on a trade or business in the jurisdiction by reason only of being a frading member or conducting commerce on the exchange.

8. The exchange system of claim 1, further comprising the guarantee by the exchange of the performance of the contracts.

9. The exchange system of claim 8, further comprising the guarantee by the exchange of the performance of the executed confracts by the transmission of a performance guarantee.

10. The exchange system of claim 9, further comprising the inclusion of an indication of the issuer of the guarantee in the transmitted performance guarantee.

11. The exchange system of claim 8, further comprising a performance guarantee election module offering a performance guarantee and transmitting a performance guarantee to the frading member upon the frading member making an election of the performance guarantee.

12. The exchange system of claim 6, further comprising access by frading members to the exchange via a client computer operatively connected to said server through the Internet.

13. The exchange system of claim 5, further comprising an eligibility module that transmits an electronic signature confirming identification of the trading member from a frading member's computer to said server upon completion and transmission of the log-on screen by a frading member.

14. The exchange system of claim 1, fiirther comprising a transaction monitor residing on said server that monitors on-going fransactions and, prior to permitting the exchange to transmit an executed confract, tests the on-going transaction for each of approval, disapproval, refusal, withdrawal, suspension and cancellation according to predetermined regulations of the exchange.

15. The exchange system of claim 1, further comprising a memorialization module to record the fransaction in the form of an elecfronic record, upon the frading members agreeing to complete a fransaction.

16. The exchange system of claim 15, further comprising the memorialization module checking the transaction as possibly being an acquisition, a sale, a license or an advertising agreement.

17. The exchange system of claim 1, further comprising an ownership authorization monitor residing on said server that confirms ownership of property relating to on-going transactions prior to permitting the exchange to transmit an executed contract.

18. The exchange system of claim 17, further comprising said ownership authorization monitor confirming ownership of property relating to trademarks, patents, authorized re-seller agreements, title and liens.

19. The exchange system of claim 13, further comprising said eligibility module, in making a determination of the eligibility of the trading member to log on to the exchange, accessing server records concerning credit authorization, fransaction alerts, pending transaction status, and trading member status.

20. The exchange system of claim 13, fiirther comprising said eligibility module, in making a determination of the eligibility of the frading member to log on to the exchange, accessing server records concerning frading member status as to each of vendors, buyers and end-users.

21. The exchange system of claim 1, fiirther comprising the distribution over plural computer servers of the exchange and databases operated upon by the exchange.

22. The exchange system of claim 1, further comprising access to said exchange via the Internet by a frading member clicking on a simple graphic or hyperlink on the web site of a third party on-line exchange ("Click-Through").

23. The exchange system of claim 1, further comprising said exchange hosting third party on-line exchanges.

24. The exchange system of claim 22, further comprising a frading member selecting the exchange for contract negotiation.

25. The exchange system of claim 22, further comprising a frading member selecting the jurisdiction of the exchange for an on-line agreement previously entered into by such frading member.

26. The exchange system of claim 22, further comprising the facility for a trading member to search the exchange system for past agreements of such trading member recorded on the exchange system.

27. The exchange system of claim 22, further comprising an interface that administers the Click-Through from another on-line exchange and that selects the system of the present invention as its contract negotiation situs.

28. The exchange system of claim 27, further comprising such interface retrieving a previously used negotiation situs in the exchange system for a particular trading member and permitting the administrator of the exchange to search the exchange system for the negotiation situs that the admimstrator may have previously created in the exchange system for a particular frading member.

29. The exchange system of claim 27, further comprising such interface permitting such admimstrator to search the exchange system for contract negotiation situs and to edit contracts with respect to ownership, etc.

30. The exchange system of claim 1, further comprising said exchange offering trading members the option of an on-line escrow service whereby payment is released to the seller trading member only when the buyer frading member has inspected and accepted the seller trading member's merchandise.

31. The exchange system of claim 1, further comprising said exchange offering frading members the option of additional ancillary services, provided by the exchange or by arrangement with third parties, such as frade finance and international clearance and settlement.

32. A method of performing an on-line transaction via an exchange residing on a server computer in which a user enters into the on-line fransaction with a member of an on-line exchange, said method comprising steps of:

(a) becoming a trading member of the exchange, where a condition of membership includes agreeing that, unless otherwise agreed in the case of any particular contract made through the exchange, confracts made through the exchange will be governed by the law of a specified jurisdiction for both substantive and conflict of laws issues;

(b) said trading member accessing the exchange via a computer network and entering the exchange via a log-on screen;

(c) said trading member sending through the exchange an unsolicited offer to confract with another trading member of the exchange; and (d) upon said frading member receiving through the exchange an acceptance of said offer, forming a completed transaction confract by receiving on-line from the exchange an executed confract.

33. A method of performing an on-line fransaction via an exchange residing on a server computer in which a user enters into the on-line transaction with a member of an on-line exchange, said method comprising steps of:

(a) becoming a frading member of the exchange, where a condition of membership includes agreeing that, unless otherwise agreed in the case of any particular contract made tlirough the exchange, confracts made through the exchange will be governed by the law of a specified jurisdiction for both substantive and conflict of laws issues;

(c) said frading member sending through the exchange an offer to confract with another member of the exchange who has invited said offer to be made; and

(d) upon said trading member receiving through the exchange an acceptance of said offer, forming a completed fransaction confract by receiving on-line from the exchange an executed contract.

34. A method of performing an on-line fransaction via an exchange residing on a server computer in which a user enters into the on-line fransaction with a member of an on-line exchange, said method comprising steps of:

(a) becoming a frading member of the exchange, where a condition of membership includes agreeing that, unless otherwise agreed in the case of any particular confract made through the exchange, confracts made through the exchange will be governed by the law of a specified jurisdiction for both substantive and conflict of laws issues;

(c) said frading member sending through the exchange an invitation for another trading member of the exchange to make an offer to said frading member; and

(d) upon said trading member receiving through the exchange said offer, forming a completed transaction confract by accepting such offer on-line and receiving on-line from the exchange an executed contract.

35. A method of performing an on-line fransaction via an exchange residing on a server computer in which a user enters into the on-line fransaction with a member of an on-line exchange, said method comprising steps of:

(a) becoming a trading member of the exchange, where a condition of membership includes agreeing that, unless otherwise agreed in the case of any particular confract made tlirough the exchange, contracts made tlirough the exchange will be governed by the law of a specified jurisdiction for both substantive and conflict of laws issues;

(b) said frading member accessing the exchange via a computer network and entering the exchange via a log-on screen;

(c) said trading member sending to the exchange an acceptance of an offer by another trading member of the exchange to contract with such other trading member; and

(d) upon said trading member sending through the exchange said acceptance of said offer, forming a completed fransaction confract by receiving on-line from the exchange an executed confract.

36. The method of claims 32 through 35, comprising the further step of said trading member accessing the exchange via a World Wide Web browser application and communicating with the exchange server computer over the Internet.

37. The method of claims 32 through 35, comprising the further step of said trading member agreeing, as part of the procedure for logging on to the exchange, that the exchange operates under express authority and pursuant to a particular statute and particular rules controlling operations of the exchange.

38. The method of claims 32 through 35, further comprising in said step of accessing the exchange via a log-on screen, the step of verifying that said trading member is a registered trading member admitted to membership of the exchange with financial bonding.

39. The method of claim 37, further comprising in said step of accessing the exchange via a log-on screen, the step of said frading member acknowledging on-line the agreement of such trading member that any on-line transactions and any coπesponding completed contracts are formed in a particular legal jurisdiction and, unless otherwise agreed in the case of any particular contract made through the exchange, are governed by laws of that legal jurisdiction, and the agreement of said trading member is memorialized by the exchange in a database file.

40. The method of claim 39, further comprising the step of said trading member, by becoming a member of the exchange, not being deemed to be engaging in or carrying out a frade or business in the legal jurisdiction by reason only of being a trading member or conducting commerce on the exchange.

41. The method of claims 32 through 35, comprising the further step of said frading member electing to receive a guarantee of contract performance after agreeing to an on-line transaction.

42. The method of claim 41, comprising the further step of said frading member, having elected to receive a guarantee of confract performance, receiving on-line a performance guarantee.

43. The method of claims 32 through 35, comprising the further step of said frading member, as a condition of becoming a trading member of the exchange, consenting to transaction testing of the pending transaction for approval, disapproval, refusal, withdrawal, suspension and cancellation under predetermined regulations of the exchange.

44. The method of claim 39, further comprising the step of said trading member, upon agreeing to a transaction and forming a pending transaction, receiving in addition to an executed confract, a memorialization notice recording the transaction as a locatable elecfronic record.

45. The method of claims 32 through 35, comprising the further step of said frading member providing on-line proof of ownership of the property to be offered for sale on the exchange.

46. The method of claim 45, comprising the further step of completing a transaction screen that includes ownership data fields for providing ownership information concerning property trademarks, patents, authorized re-seller agreements, title and liens.

47. The method of claims 32 through 35, further comprising the step of said trading member, as part of the procedure for obtaining membership of the exchange, agreeing that when said frading member logs on to the exchange, said frading member will be screened as to credit authorization, fransaction alerts, and pending fransaction status.

48. The method of claim 41 , further comprising the step of said frading member receiving an insurance election screen offering a performance guarantee, and receiving a performance guarantee on-line upon making an election of the performance guarantee.

49. A computer program product, stored on a computer readable storage medium, which program product when executed on a computer causes a computer server to host an exchange performing computer-based on-line commerce transactions between a first trading member and a second trading member, said exchange computer program product comprising:

(a) a frading member log-on module receiving a trading member log-on data;

(b) a frading member transaction execution module engaging a first frading member with a second trading member; and

(c) a fransaction completion module operating, upon the first trading member agreeing to complete a transaction with the second trading member, to form a completed transaction by transmitting to the first trading member and the second frading member executed fransaction contracts.

50. The program product of claim 49, further comprising a module permitting the first frading member to contact the exchange via a World Wide Web browser application.

51. The program product of claim 49, further comprising a module operatively connecting the exchange server to the Internet, allowing the first trading member and the second frading member to engage in real-time on-line commerce fransactions.

52. The program product of claim 49, further comprising a module presenting an agreement screen on a computer to the first trading member that requires the first trading member to agree, prior to entering into a fransaction module, that the exchange operates under express authority and pursuant to a particular statute which forms the rales controlling operations of the exchange.

53. The program product of claim 49, further comprising a module verifying that the first frading member is a registered trading member admitted to membership of the exchange and is currently in good financial standing.

54. The program product of claim 49, further comprising an acknowledgment module that accepts input from the first frading member that any on-line fransactions and any corresponding contracts are formed in a particular legal jurisdiction and are governed by laws of that legal jurisdiction.

55. The program product of claim 49, further comprising a transaction assurance module transmitting to the first frading member an assurance from the exchange that such trading member is not deemed to be engaging in or carrying on a frade or business in the legal jurisdiction by reason only of being a frading member or conducting commerce on the exchange.

56. The program product of claim 49, further comprising a module transmitting on-line to the first frading member a guarantee of contract performance.

57. The program product of claim 49, further comprising a testing module testing a pending fransaction for approval, disapproval, refusal, withdrawal, suspension and cancellation, conducted under a rale set residing on the exchange server.

58. The program module of claim 49, further comprising a module causing the computer server to host a completed contract memorialization database that transmits a completed transaction contract to trading members who have agreed to a transaction and who have formed a pending transaction, and that records in the completed confract memorialization database a transaction confract record, and provides to such trading members a database record identification corresponding to the completed transaction contract.

59. The program product of claim 49, further comprising a module requiring on-line proof of ownership of a property prior to accepting the property for sale on the exchange.

60. The program product of claim 49, further comprising an eligibility monitoring module determimng the eligibility of a trading member to log onto the exchange, which screens the trading member as to credit authorization, transaction alerts, and pending transaction status.

61. The program product of claim 49, further comprising a module which, after the first frading member completes a first fransaction with a second frading member, connects the first frading member with other frading members to access products related to the first transaction.