Digimarc Offers to License Patents Essential for Secure Digital Music Delivery to SDMI.

Business Editors

PORTLAND, Ore.--(BUSINESS WIRE)--Jan. 25, 2000

Digimarc Corporation (Nasdaq:DMRC), the world leader in digital watermarking technology and applications, today announced it has informed the Secure Digital Music Initiative (SDMI) that Digimarc holds essential patents necessary to implement the technology chosen by the association for its secure music specification. Digimarc has indicated its willingness to license its technology on reasonable and non-discriminatory terms and conditions.

SDMI is the industry association sponsoring development of open technology specifications for protected storage, distribution and playback of digital music. The Recording Industry Association of America, along with its sister organizations IFPI, in Europe, and RIAJ, in Japan, and the major record companies, were the driving forces behind the initial launch of SDMI. The association has brought together the worldwide recording industry and technology companies to develop an open, interoperable architecture and specification for digital music security. The specification will answer consumer demand for convenient accessibility to quality digital music, enable copyright protection for artists' work, and enable technology and music companies to build successful business models for the sale of music in the dawning digital economy. Its members include 159 companies and organizations representing a broad spectrum of information technology and consumer electronics businesses, Internet service providers, security technology companies and members of the worldwide recording industry.

&uot;As a member of SDMI, we elected to disclose and license on reasonable and non-discriminatory terms, proprietary Digimarc technology necessary to implement Phase I of the secure music specification being developed in this industry-wide process,&uot; said Bruce Davis, president and CEO of Digimarc. &uot;From what we know of the selected technology thus far, several of our patents are essential to its implementation. We support the standards process and are offering to make our technology widely available for the benefit of the music industry, once proper licenses have been negotiated.&uot;

The relevant Digimarc technology is covered by a number of issued

and pending patents, including:

Issued Patents

-- 5,809,160

-- 5,850,481

-- 5,930,377

Pending Applications

-- Audio Watermarking To Convey Auxiliary Control Information, And Media Embodying Same

-- Consumer Audio Appliance Responsive To Watermark Data Methods For Decoding Watermark Data From Audio, And Controlling Audio Devices In Accordance Therewith 

-- Watermark Encoding Method Exploiting Biases Inherent In Original Signal

-- Methods for Audio Watermarking and Decoding

-- Data Hiding Based on Neighborhood Attributes

-- Identification/Authentication System Using Robust Distributed Coding

-- Audio Steganography

Digimarc's technology is gaining momentum toward becoming the global de facto standard for digital watermarking in a variety of media industries. Over the last several years, the company has established a pervasive following in the still image market, supporting copyright protection, digital asset management, digital rights management, and business to business image commerce solutions. Late last year, Digimarc made public its selection by a global consortium of leading central banks to build a system to deter the use of personal computers in the counterfeiting of money. Most recently, the company announced partnerships with leading magazine publishers--including Conde Nast (Wired Magazine) and Hearst Corporation--and leading PC camera vendors Logitech and 3COM in anticipation of its launch of MediaBridge. MediaBridge is a breakthrough innovation in Internet access and navigation that will allow magazine readers to immediately and seamlessly link from interesting content in magazines to relevant Internet destinations merely by showing the page containing the content to a Digimarc-enabled PC camera. Digimarc is also a prime contender, along with its joint venture partners, Macrovision and Philips, to provide future industry standard copy prevention and play control solutions for DVD video.

About Digimarc

Digimarc (Nasdaq:DMRC) is the leading provider of patented digital watermarking technologies that allow imperceptible digital code to be embedded in media content regardless of whether the content is distributed in analog or digital format. The digital code embedded in the media content creates a bridge between traditional and online media, enabling a wide range of applications for the benefit of the owners and consumers of media content. The Company's most recent innovation, MediaBridge, provides a fundamentally new way to access the Internet. MediaBridge allows printed materials, such as magazine advertisements, to become direct portals to relevant destinations on the Internet. Digimarc also provides anti-counterfeiting solutions to the world's leading central banks and image commerce technologies to leading stock photo agencies, major corporations, and other members of the creative community. For more information about Digimarc, please visit our Web site at www.digimarc.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 of Digimarc Corporation. All other trademarks are the property of their respective owners.