Commtouch Wins Exclusive Marketing Rights for DCC; Agreement Enhances Commtouch Licensing Strategy.

MOUNTAIN VIEW, Calif. -- Commtouch(R) (NASDAQ: CTCHC), the developer of RPD(TM) technology for real time anti-spam and zero-hour virus protection, announced today that it has signed an agreement to obtain exclusive rights for worldwide commercial marketing of DCC. DCC, the leading open source anti-spam software, is used by multiple anti-spam vendors, security vendors and managed service providers (MSPs) to protect tens of thousands of enterprises.

Confirms Commtouch's Leadership in Anti-Spam Licensing

Through licensing of RPD to over 20 commercial partners worldwide, Commtouch is already a leading player in the anti-spam OEM arena. "As the provider of both DCC and RPD, we expect to license anti-spam technology to more security vendors than any other provider," said Gideon Mantel, Commtouch CEO. "The DCC licensing business is an important new revenue source and also a path to bolstering sales of Commtouch's RPD-based anti-spam and virus outbreak detection solutions."

A Win-Win Proposition to Vendors and Service Providers

For the numerous commercial users of DCC - anti-spam vendors, security vendors and managed service providers (MSPs) - Commtouch will offer a new DCC licensing program. Companies using DCC also will have an easy upgrade path to RPD, Commtouch's industry-leading anti-spam and virus outbreak detection technology.

Commtouch is offering an "early bird" discount to companies that sign up before the end of June 2004. In connection with the use license to DCC, Commtouch's new commercial licensing program will also make available for license certain elements of U.S. Patent No. 6,330,590.

"We believe that once word spreads about this agreement, commercial users of DCC will recognize the advantages of our collaboration with DCC developers, and cooperate fully with the new licensing program," said Gary Davis, Commtouch's Licensing Officer and General Counsel.

A Win-Win Situation for the DCC Community

"By working with Commtouch, we expect to increase DCC's effectiveness in fighting spam, providing better services for commercial DCC users," said Vernon Scrhyver, author of the DCC code. "At the same time, we will continue supporting free spam fighting. Use of the DCC code and participation in the global network of DCC clients and servers will remain free to all public network users and organizations that are not reselling anti-spam services."

About DCC

DCC (Distributed Checksum Clearinghouse) is a system of millions of users, tens of thousands of clients and more than 250 servers that collect checksums related to more than 180 million messages per day. It is based on cooperative information sharing. DCC clients can filter spam by using data from the distributed database maintained by the servers. In turn, DCC servers are informed automatically by DCC clients about current spam.

About Commtouch

Commtouch Software Ltd. (Nasdaq:CTCHC - News) is dedicated to protecting and preserving the integrity of the world's most important communications tool -- email. A global developer and provider of proprietary anti-spam solutions, Commtouch has an installed base of over 25 million users. The company's core technologies, including RPD(TM) -- Recurrent Pattern Detection, reflect Commtouch's 14 years of experience developing messaging software. Commtouch solutions are incorporated into OEM applications and are also sold through channels and resellers. Commtouch is headquartered in Netanya, Israel and has a subsidiary in Mountain View, CA. For more information, see: www.commtouch.com.

For coverage of Commtouch technology by industry analysts such as IDC and Osterman Research, see: http://www.commtouch.com/site/ResearchLab/research.asp

This press release contains forward-looking statements, including projections about our business, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. For example, statements in the future tense, and statements including words such as "expect," "plan," "estimate," "anticipate," or "believe" are forward-looking statements. These statements are based on information available to us at the time of the release; we assume no obligation to update any of them. The statements in this release are not guarantees of future performance and actual results could differ materially from our current expectations as a result of numerous factors, including the failure to satisfy the conditions imposed by the Nasdaq Listing Qualifications Panel for the continued listing of Commtouch shares on The Nasdaq SmallCap Market; business conditions and growth or deterioration in the Internet market, commerce and the general economy, both domestic as well as international; fewer than expected new-partner relationships; fewer than expected license agreements resulting from Commtouch's exclusive rights to market DCC; competitive factors including pricing pressures; technological developments, and products offered by competitors; the ability of our OEM partners to successfully penetrate markets with products integrated with Commtouch technology; a slower than expected acceptance rate for real time AV solutions in general and the Commtouch virus detection engine in particular; availability of qualified staff for expansion; and technological difficulties and resource constraints encountered in developing new products, such as the Commtouch virus detection engine, as well as those risks described in the text of this press release or the company's Annual Reports on Form 20-F and reports on Form 6-K, which are available through www.sec.gov.

Recurrent Pattern Detection and RPD are trademarks and Commtouch is a registered trademark of Commtouch Software Ltd. U.S. Patent No. 6,330,590 is owned by Commtouch.