California Extends Contract with Digimarc for Largest Driver License Issuance System in the U.S.; Contract Extends Digimarc's Long-Term Relationship with California by at Least Two Additional Years.

BEAVERTON, Ore. -- Digimarc Corporation (Nasdaq:DMRC) today announced the California Department of Motor Vehicles, a long-time customer and the largest issuer of driver licenses in the U.S., has signed a two-year contract extension with Digimarc, including the option for the State to extend the contract for one additional year.

California is a leader in secure issuance of driver licenses, supporting a population of 34 million citizens. Under this contract, Digimarc will continue to operate the nation's highest volume central issue driver license system. The system includes a world-class card production factory and more than 170 enrollment locations.

"We are pleased to extend our long-term relationship with the State of California," said Robert Eckel, president, government programs, Digimarc. "With this extension, we look forward to continuing to support the State in producing secure, durable and high-quality driver licenses and ID cards, while meeting California's stringent standards and helping position the DMV to comply with emerging federal REAL ID Act requirements."

About Digimarc

Digimarc Corporation (Nasdaq:DMRC), based in Beaverton, Oregon, is a leading supplier of secure identity and media management solutions. Digimarc provides products and services that enable the production of more than 60 million personal identification documents, including two-thirds of U.S. driver licenses and IDs for more than 20 countries. Digimarc's digital watermarking technology provides a persistent digital identity for various media content and is used to enhance the security of financial documents, identity documents and digital images, and support other media rights management applications.

Digimarc has an extensive intellectual property portfolio, with more than 200 issued U.S. patents with more than 4,000 claims, and more than 400 pending patent applications in digital watermarking, personal identification and related technologies. The Company is headquartered in Beaverton, Oregon, with other U.S. offices in Burlington, Massachusetts; Fort Wayne, Indiana; and the Washington, DC, area; and international offices in London and Mexico. Please go to www.digimarc.com for more company information.

Securities Safe Harbor 

With the exception of historical information contained in this release, the matters described herein contain certain "forward-looking statements" that are made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include statements relating to the continuation of the contract between Digimarc and the California Department of Motor Vehicles and other statements containing the words "believes," "expects," "estimates," "anticipates," "will" or words of similar import or statements of management's opinion. These statements are subject to certain assumptions, risks, uncertainties and changes in circumstances. Actual results may vary materially from those expressed or implied from the statements herein or from historical results, due to changes in economic, business, competitive, technological and/or regulatory factors. More detailed information about risk factors that may affect actual results is set forth in filings by Digimarc with the Securities and Exchange Commission on Forms 10-K, 10-Q and 8-K, including, but not limited to, those described in the Company's Form 10-Q for the quarterly period ended June 30, 2005, in Part I, Item 2 thereof ("Management's Discussion and Analysis of Financial Condition and Results of Operations") under the caption "Risk Factors." Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's opinions only as of the date of this release. Except as required by law, we undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements.