Indiana Selects Digimarc to Deliver Next-Generation Driver License Issuance System; Digimarc Wins Competitive Bid to Provide New Over-the-Counter Driver License Issuance System and Help the State Prepare for Real ID.

BEAVERTON, Ore. & FORT WAYNE, Ind. -- Digimarc Corporation (NASDAQ: DMRC) today announced it has been awarded a six-year contract with the Indiana Bureau of Motor Vehicles (BMV) to supply a new driver license issuance system, including a number of innovations in driver license security and system architecture, to help the state provide the highest level of customer service and security to its citizens.

The Indiana BMV selected Digimarc, the market leader in driver license issuance solutions, through a competitive bid process to deliver and support an over-the-counter issuance system for secure driver licenses. The Digimarc solution will be deployed across the State to process applicants and instantly issue driver licenses. The new system is expected to be fully operational by the fall of 2006.

"Driver license systems touch nearly every adult citizen in the State, making vendor quality and performance essential to our ability to meet security and service levels," said Joel Silverman, commissioner, Indiana Bureau of Motor Vehicles. "Digimarc demonstrated the depth of expertise, solution capability, and commitment to quality and customer service we require to make our new driver license system a success. Additionally, the BMV is pleased to be partnering with Digimarc whose operations in Fort Wayne play a key role in supporting this contract and contributing to our state's economy."

Furthering the broad adoption of digital watermarking, Indiana will incorporate covert, machine-readable Digimarc(R) IDMarc (TM) digital watermarking into its driver license to enable cross-jurisdictional authentication and deter ID counterfeiting. Indiana joins more than a dozen States across the country that have adopted this latest innovation in machine-readable ID authentication.

Digimarc will deploy the Microsoft .NET version of its driver license issuance solution in Indiana, providing seamless integration with other State databases and applications, and establishing a platform that can be easily extended to incorporate new secure ID applications in support of State or Federal requirements, including the REAL ID Act.

"We are excited to have the opportunity to help the State of Indiana enhance the security of its driver license with innovations like digital watermarking, and to provide a next-generation ID issuance solutions designed to help Indiana address current needs while preparing for requirements such as those posed by the REAL ID Act," said Robert Eckel, president, government programs, Digimarc. "As the spotlight continues to focus on the driver license to protect the Homeland we look forward to continuing our long-term relationship with the Indiana BMV."

The Digimarc solution will include:

--More than 200 workstations and camera towers to process driver license applications, capture signatures, and take the industry's highest quality portraits of applicants.

--Over-the-counter secure printing systems allowing associates to securely and easily issue driver licenses at BMV offices across the State.

--A secure extranet for integrated inventory management of card materials and consumables, enabling direct management and control by BMV office personnel of production materials.

Digimarc employs more than 500 people around the world. Its operations in Fort Wayne, Indiana, are home to the Company's manufacturing and supply chain center of excellence, and a primary development and customer support center.

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 230 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.

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. Such forward-looking statements include statements relating to the implementation and performance of the new driver license system in Indiana and other 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 quarterly period ended September 30, 2005, in Part I, Item 2 thereof ("Management's Discussion and Analysis of Financial Condition and Results of Operations") under the caption "Risk Factors." 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.