New Digimarc Patent Proposes Solution for Protecting Copyrights, Improving Marketing and Enhancing Consumer Experience with Entertainment Content on the Internet.

Patented Invention Enables Identification of Music, Images or Movies Distributed on the Internet

BEAVERTON, Ore. -- Digimarc Corporation (NASDAQ: DMRC) today announced the U.S. Patent Office has issued the Company a patent (U.S. Patent No. 7,171,016) that proposes a solution for identifying digitally watermarked music, images or movies on multiple Internet sites, enabling a range of associated applications, including providing reports to rights holders to enable reasonable accounting for the distributed content. This solution directly addresses the challenges facing content owners and site operators in accurately identifying copyrighted content commingled with user-generated content on sites like YouTube and MySpace.

"Digital watermarking - and, in particular, the innovations described in this newly issued patent - can be an important element of building long-term, viable business models from the disruptive changes in entertainment distribution and consumption that have evolved, as embodied most strikingly in social networking sites," said Bruce Davis, chairman and CEO, Digimarc. "Much of the repurposed content on YouTube, for example, contains copyrighted entertainment. If social networking sites implemented software to check each stream, they could identify copyrighted subject matter, create a report, negotiate compensation for the value chain and sell targeted advertising for related goods and services. There is no need to impede consumers. In fact, the specific identification of the content could guide provision of related goods, services and community designed to maximize the consumer's enjoyment of the entertainment experience."

Davis continued, "In a true user-generated content model, creators could embed contact information akin to what photographers have done for years with our digital watermarking, providing the means for fans and talent scouts to communicate with the artists, communicate copyrights unobtrusively, assess the popularity of the work, etc. The architecture, as embodied in this patent, could serve music, movies and photography equally well."

The basic processes necessary to provide these services have been used for more than a decade by professional photographers and stock photo agencies to protect copyrights and facilitate licensing. Photographers and agencies have used MyPictureMarc and ImageBridge from Digimarc to embed copyright information and contact information into images distributed on the Internet to track distribution, identify unlicensed uses, and make it easy to obtain appropriate rights.

The patent, entitled "Method For Monitoring Internet Dissemination Of Image, Video And/Or Audio Files," describes ways to determine whether entertainment content on Internet sites contains digital watermarks, get associated ownership information and links to associated web services, and provide distribution reports to rights holders.

Digimarc encourages interested parties to contact the Company regarding ways in which the innovations described in this and other patents owned by Digimarc can address issues and opportunities they may face. Digimarc actively licenses its patents to a broadening range of business partners. For more information about Digimarc's IP licensing program, please visit: http://www.digimarc.com/comm/patent_licensing.asp.

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 300 issued U.S. patents with more than 5,000 claims, and more than 500 pending U.S. and foreign 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 regarding the effectiveness of digital watermarking and the technology described in Digimarc's U.S. Patent No. 7,171,016 in identifying digitally watermarked content on multiple Internet sites and providing reports back to the content owner, as well as 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 September 30, 2006, in Part I, Item 2 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 I, Item 4 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.