Digimarc Mobile E-Commerce Pilot Debuts at Popular Tokyo-Based ''Maid in Japan'' Cafe; Cafe in Akihabara District to Pilot Digital Watermarking Application That Links Camera Phone Users from Printed Materials to Online Information.

BEAVERTON, Ore. & TOKYO -- Digimarc Corporation (Nasdaq:DMRC) announced today the launch of a digital watermarking pilot in Japan that will allow customers of one of the country's popular "Amusement Cafe Maid in Japan" cafes to use their camera phones to interact with digitally-watermarked print materials and connect to online information such as a theme-oriented city guide and mobile phone wallpaper featuring favorite characters.

The digital watermarking pilot is being rolled out by MediaGrid, Digimarc's Japanese partner for Digimarc Mobile solutions, and Success Corp., a leading developer of games and video games in Japan, at one of the popular theme cafes.

"Machine-readable digital codes placed in printed marketing materials such as magazines, catalogs and fliers turn each printed page into a hyper link to web content. This is an increasingly popular way for Japanese consumers to use their camera phones to connect to immediate opportunities to purchase, trial or access a variety of products and entertainment online," said Stuart Rosove, senior director, business development, Digimarc. "We are delighted to see MediaGrid and Success Corp. bringing this innovative digital watermarking pilot to Japan."

Digital watermarks offer brand-sensitive companies an elegant, inobtrusive alternative to industrial-style barcodes and QR codes, allowing companies to easily extend their print campaigns to the mobile world without having to use visible marks that detract from the their brand.

On August 8, Success Corp. will invite more than 300 guests to the Amusement Cafe Maid in Japan and a launch party of MediaGrid's digital watermarking LeadiaPix application, which is based on the Digimarc Mobile platform and has been ported to 90% of the 3G phones in the region, including phones offered by KDDI, DoCoMo and Vodafone.

By simply downloading the LeadiaPix reader software and using their enabled camera phone to scan images of digitally watermarked objects, such as drink coasters at the launch event, users will be able to access information and games about various characters portrayed by servers at the cafe.

"At least half of all Japanese camera phone users access online content to download music, pictures for their phones, games, and other entertainment content," said Kazuhiro Okamura, director of media development profit center, MediaGrid. "Success Corp. was looking for a way to provide very unique mobile-delivered content to its cafe guests and was impressed by the ability of digital watermarking to offer these print-to-web linking capabilities without spoiling the quality of their design."

"We are excited by the potential of using digitally watermarked printed materials in Amusement Cafe Maid in Japan as a way to enhance communications visually and the unknown experience between customers and content," said Hiroaki Ohchi, planning group manager, mobile contents department, Success Corporation.

Targeted at Japan's so-called "Otaku" or Geek sub-culture, a $3.5 billion market of technology consumers of video games, comic books and fantasy characters, the "Amusement Cafe Maid in Japan" cafe is part of a chain of family-oriented "Maid Cafe" theme restaurants that have become enormously popular throughout Tokyo and other large Japanese cities. The cafes include servers dressed like maids who entertain their guests by dressing up as characters from favorite video game and comic book series, singing, dancing, and playing games with their customers. There are approximately 100 cafe locations in Tokyo alone.

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 annual 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 260 issued U.S. patents with more than 5,000 claims, and more than 500 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.

About MediaGrid

MediaGrid, based in Tokyo, Japan, was established in 2003 with a view to expanding the e-commerce service business by revenue-sharing model, and to commercialize a new business model used by consumers, which applies digital watermark technology. Nowadays the company is active with a focus on various mobile applications in the fields of Data Hiding, E-Commerce and other businesses by providing watermarking solutions enabling cross-media marketing and securing valuable digital contents, etc.

Additional information:

http://www.digimarc.com/watermark/mobile/ -- More information on Digimarc Mobile

http://www.digimarc.com/about/release.asp?newsID=458 -- More about other Digimarc Mobile partners

http://www.msnbc.msn.com/id/11208685/ -- More on the popularity of the "Maid in Japan" cafe

http://web-japan.org/trends/business/bus050830.html -- More on the Japanese Geek subculture 

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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 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 quarter ended March 31, 2006, in Part II, Item 7 thereof ("Management's Discussion and Analysis of Financial Condition and Results of Operations") under the captions "Liquidity and Capital Resources" and "Factors Affecting Forward Looking Statements" and in Part II, Item 9A thereof ("Controls and Procedures"). 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.