Digimarc Digital Watermarking Selected for Government Smart Card Program; Company Teams with Prime Contractor Logicon Inc. to Deliver Additional Security to Smart Access ID Cards.

Business/High Tech Editors

TUALATIN, Ore.--(BUSINESS WIRE)

Aug. 17, 2000 - Digimarc Corporation (Nasdaq:DMRC), the world leader in digital watermark technology and applications, announced today that its Identity Document Mark product has been selected as a component of a multi-year project to provide smart card solutions to the U.S. federal government.

Digimarc is participating in the project as a sub-contractor to Logicon Inc., a Northrop Grumman Corporation (NYSE:NOC) company. Logicon was one of five prime system integrators selected in May by the U.S. General Services Administration (GSA) to develop the government's "Smart Access Common ID Card" system. The program has a total value to all contractors of $1.5 billion.

Digimarc's patented digital watermark technology enables imperceptible digital watermarks, called Identity Document Marks, to be added to smart cards and other documents without requiring extra on-card storage resources or changes in card design. Identity Document Marks are machine-readable, enabling authentication and verification of the document. When applied to ID cards, these marks are an effective deterrent to photo swapping and data alteration.

As part of the project, Digimarc's Identity Document Marks will be offered as an additional security feature for the smart cards issued by the departments of the federal government. Over the next few years, the federal government plans to provide millions of government employees with a single-access smart card for a variety of e-business uses.

"Digimarc's Identity Document Marks provide a new and low-cost covert security feature that Logicon can deliver to the federal government departments that issue smart access cards," said John Gist, program manager, Logicon.

"The ability to verify an employee's identity and provide access to a high-security facility are critical issues for governments and employers. That's why industry acceptance of machine-readable digital watermarks to enhance card security is growing rapidly," said J. Scott Carr, vice president and general manager of Digimarc's Secure Documents business. "Digimarc's Identity Document Marks will integrate seamlessly into this comprehensive program, giving the government additional tools to verify and authenticate employee smart access cards without consuming expensive smart card resources."

About Digimarc

Digimarc (Nasdaq:DMRC) is the world leader in digital watermark technology that allows imperceptible digital code to be embedded in any analog or digital media content for a wide variety of applications. The company has three business units. Digimarc Media Commerce solutions enable and facilitate e-commerce by connecting digital image, audio and video content to data, information and e-commerce opportunities across the Internet while allowing the tracking, management and protection of content. Digimarc Secure Documents provides anti-counterfeiting solutions to deter unauthorized reproduction of valuable documents. Digimarc MediaBridge -- a fundamentally new way to access the Internet -- allows printed materials, such as magazine advertisements, to become direct portals to relevant destinations on the Internet. For more information about Digimarc, please visit our Web site at www.digimarc.com.

About Logicon

Logicon Inc., headquartered in Herndon, Va., is a subsidiary of Northrop Grumman Corporation. It is a leader in advanced information technologies, systems and services. Areas of expertise include command, control, communications, computers, intelligence, surveillance and reconnaissance (C4ISR); weapon systems; information systems; training and simulation; science and technology; base and range support; and commercial information services. Learn more about Logicon on the Web at www.logicon.com.

This release contains forward-looking statements that are subject to risks and uncertainties. Although Digimarc Corporation believes that the expectations reflected in its forward-looking statements are reasonable, actual results could differ materially from those expectations. Important cautionary statements and risk factors that would affect actual results are discussed in materials filed by Digimarc Corporation with the Securities and Exchange Commission.

Digimarc is a registered trademark and MediaBridge is a trademark of Digimarc Corporation. All other trademarks are the property of their respective owners.

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