Digimarc Signs Contract Extension with Kansas, Will Support Significant New Security Enhancements.

Business Editors/High-Tech Writers

TUALATIN, Ore.--(BUSINESS WIRE)--Sept. 3, 2003

New Five-Year Contract Extension Includes Digimarc IDMarc(TM)

Digital Watermarking Security Features, Secure Central Issue

Printing and a Leading-Edge Photo Identity Verification System

Digimarc Corporation (Nasdaq:DMRC) today announced it has received a five-year contract extension from the Kansas Department of Revenue (KDOR) to supply the state with a number of leading-edge security enhancements and upgrades to its digital driver license system and the installation of 112 new workstations.

Among the most important security enhancements covered in the contract are:

-- the addition of covert, Digimarc IDMarc digital watermarking

security features in the Kansas driver license, enabling

cross-jurisdictional document authentication and age

verification;

-- conversion of the state's over-the-counter issuance system,

which currently produces and issues driver licenses directly

at the KDOR branch offices and County Treasurer offices, to

production and issuance at a centralized and highly secure

facility (citizens will receive a temporary photo ID at the

time of application until their permanent driver license

arrives in the mail); and

-- implementation of a new, photo identity verification system,

including a new central image server and software, that will

be used to compare the images of new applicants with the

state's existing database of 5.6 million driver license images

as a means to identify duplicates and aid in the investigation

of identity fraud.

Digimarc and Kansas are also planning to authenticate source documents, such as billing and address information, commonly used to establish a person's identity before being issued a driver license.

"As the fifth state to adopt IDMarc digital watermarking and the second to implement our photo identity verification solution, Kansas is demonstrating its commitment to tackling the issue of driver license security and identity fraud head on. Central issuance of driver licenses and IDs (vs. "over-the-counter," or "while-you-wait" methods) will add an additional level of security and integrity to the overall card issuing process," said Indra Paul, president, Digimarc ID Systems. "We are very pleased to have the opportunity to support the state's leading-edge efforts."

"We are impressed with the cost effective and highly secure system that Digimarc is proposing," said Sheila Walker, director, Kansas Division of Motor Vehicles, "and we are confident that these enhancements will help meet the requirements set by our legislature to upgrade the security of our driver license system and implement a new identity verification capability designed to reduce identity fraud."

About Digimarc

Digimarc Corporation (Nasdaq:DMRC), based in Tualatin, Oregon, is a leading supplier of digital watermarking and secure personal identification technologies and solutions used in a wide range of security, identification and digital media content applications.

Digimarc provides more than 60 million personal identification documents and driver licenses per year for 33 U.S. states and more than 20 countries. Digimarc's digital watermarking technology provides a persistent digital identity to all media content and enhances the security of financial documents, identity documents and digital images.

Digimarc has an extensive intellectual property portfolio, with 118 issued U.S. patents with more than 2,000 claims, and more than 350 pending patent applications in digital watermarking, personal identification and related technologies. The company is headquartered in Tualatin, Oregon, with other U.S. offices in Burlington, Massachusetts; Fort Wayne, Indiana; San Francisco, California; and the Washington, D.C., area; and European offices in London and Vienna. 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. These statements are based on management's current reasonable expectations and 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 these factors is set forth in filings by Digimarc with the Securities and Exchange Commission, including the most recent annual report on Form 10-K and the most recent quarterly report on Form 10-Q. Digimarc is not obligated to (and expressly disclaims any obligation to) revise or update any forward-looking statements in order to reflect events or circumstances, whether they arise as a result of new information, future events, or otherwise.