Oregon Awards Digimarc New Contract to Strengthen Driver License Security and Fight Identity Theft and Fraud; Oregon Awards Digimarc Four-Year Contract Extension to Provide Centralized Driver License Production and Facial Recognition.

BEAVERTON, Ore. -- Digimarc Corporation (NASDAQ:DMRC) today announced it was awarded a contract extension by the Oregon Driver and Motor Vehicle Services (DMV) to deter driver license fraud, identity theft and related crime head on.

Under the four-year contract extension, Digimarc will migrate the State's driver license issuance from an over-the-counter process to a secure centralized production, allowing for the production of a more secure license that incorporates Digimarc (R) IDMarc(TM) digital watermarking security features. In addition, Digimarc will deliver a facial recognition solution to combat duplicate driver license fraud. This program will significantly strengthen the process Oregon uses to issue driver licenses to citizens and support the State as it prepares to comply with the REAL ID Act.

The passage of Oregon Senate Bill 640 last year requires Oregon DMV to implement new and advanced secure ID technologies and processes -- including identity verification using facial recognition technology, and central driver license production -- to ensure that valid State driver licenses are only issued to one applicant whose identity has been verified.

To help it meet the provisions of the bill, Oregon extended its contract with Digimarc, the leading supplier of secure government-issued IDs in North America, to implement a new set of industry leading secure ID products and best practices in driver license enrollment and issuance.

"We look forward to continuing and expanding our relationship with Digimarc to help our agency meet the requirements of SB 640 and prepare for new Federal ID security standards while giving Oregon's citizens the confidence that their identities will be protected," said Lorna Youngs, DMV Administrator. "We anticipate a safe and smooth migration to a more secure means of producing and issuing Oregon driver licenses."

"Digimarc provides secure centralized ID issuance to 12 states in the U.S. and several international issuers. As an Oregon-based corporation with more than 100 employees in the State, we are pleased to help Oregon DMV implement an advanced ID security solution to protect our citizens from identity theft and fraud and fortify the security of the driver license issuance process," said Bruce Davis, CEO, Digimarc. "With these important enhancements, Oregon becomes a model for other States that are fighting fraud and associated criminal activity and positions the State to comply with the requirements of the REAL ID Act."

By mid 2007 Oregon will roll out the following components of its new, enhanced system:

--Secure, centralized driver license production -- Beginning in mid 2007, Oregon drivers who apply for a new or renewal license will receive their driver license (which will be manufactured in one of Digimarc's highly secure, centralized facilities) in the mail, only after the applicant's identity has been positively validated.

In mid 2008, Oregon will introduce additional secure ID best practices and solutions, including:

--Digimarc Biometric Identification -- DMV staff will be able to compare a driver license applicant's photo against all other photos of registered drivers in Oregon to determine whether the applicant is attempting to obtain a duplicate license under a false identity. Digimarc has successfully worked with several jurisdictions around the U.S., including Colorado, Kansas and Massachusetts, to stop hundreds of fraud attempts each year with Digimarc Biometric Identification solutions.

--Digimarc Camera Tower and Capture Software -- New portrait and signature capture products will be installed at 64 DMV offices around the State to take the industry's highest quality portrait images for card production, renewals and fraud investigation. These systems will include 1:1 facial recognition to compare a renewing applicant's photo to the photo in his or her driver record to deter fraud.

--Advanced, market-leading driver license security features, including Digimarc IDMarc digital watermarks for machine-readable, cross-jurisdictional driver license authentication. Today, digital watermark security features are contracted for use in more than 40% of U.S. driver licenses.

Digimarc is the leader and industry expert in centralized driver license production in North America. The Company centrally produces more than 23 million U.S. driver licenses annually for 12 States, including California, Washington, Texas and Massachusetts. More and more States are moving to or considering central issuance of driver licenses, particularly in light of the REAL ID Act requirements to strengthen driver license security.

For more information on Senate Bill 640, the REAL ID Act and changes coming to the Oregon DMV, please visit: http://www.oregon.gov/ODOT/DMV/news/nr_real_id_sb_640.shtml

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.

Additional Information

http://www.digimarc.com/about/real_id.asp Read about the REAL ID Act.

www.digimarc.com/camera_tower More information on the Digimarc Camera Tower, offering secure, high quality capture of the images needed for card production, renewals, fraud investigation, and more.

http://www.digimarc.com/watermark/idmarc/ More information on Digimarc IDMarc digital watermarking security to fight counterfeiting and identity fraud

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 expected revenues under the contract extension with the Oregon DMV, the rollout of new products, upgrades and features in the State of Oregon, and the expected benefits of Digimarc products and services, as well as 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 quarter ended March 31, 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.