Press Release

Washington Chooses Digimarc to Implement Border Crossing Pilot

Digimarc will provide the Washington State Department of Licensing with applicant enrollment and screening solutions, and produce the state’s RFID-enabled Enhanced Driver License

Beaverton, Ore. – July 25, 2007 – Digimarc Corporation (NASDAQ: DMRC) today announced an agreement with the Washington State Department of Licensing (DOL) to support the State in implementing their newly developed Enhanced Driver License (EDL). Washington DOL and the Department of Homeland Security (DHS) have agreed to run an initiative that allows the EDL to be used as an alternative travel document to re-enter the United States through sea and land border crossings. Digimarc will supply Washington DOL with applicant enrollment and screening solutions as well as production of the RFID-enabled EDL.
Washington’s enhanced driver license system will utilize Digimarc applicant screening solutions to verify an applicant’s identity documents; data such as name and address; and facial biometrics to ensure that only one license is issued to one legitimate card holder.
Digimarc launched ExianSmart, its chip-enabled driver license solution last year in anticipation of States’ needs for new applications of the driver license. The Digimarc ExianSmart driver license for Washington will include RFID technology that is compatible with the DHS Western Hemisphere Travel Initiative program. This will offer a convenient and cost-effective option for citizens to carry a single credential that meets their driving, identity, and land and sea border crossing needs.
“We are pleased to be working with Digimarc to bring a number of innovations and best practices in ID security to our Enhanced Driver License pilot for border crossing,” said Liz Luce, Director, Washington State Department of Licensing.
”Digimarc is likewise pleased to be working with Washington on this important pilot program, which we believe will lead to more secure processes for obtaining a valid driver license and provide a convenient and secure credential to protect national security at border crossings,” said Bruce Davis, chairman and CEO, Digimarc. “Digimarc launched its EDL solution last Fall in response to States and Canadian provinces that were seeking means to maintain use of the driver license as an acceptable form of identification for border crossing while giving citizens a convenient and cost-effective alternative to the use of a passport or special 'PASS' card required by DHS for border crossing."
Recent legislation in Washington authorizes the use of enhanced driver licenses, issued on proof of citizenship, identity and residency, as a WHTI alternative document to a passport for re-entry into the United States. The new licenses will cost .
The Enhanced Driver License itself will carry traditional security features found on the current Washington driver license, including digital watermarking, as well as new features including an RFID chip and a "Machine Readable Zone" (MRZ) that is compatible with travel document readers.
The Washington initiative will leverage a number of market leading Digimarc driver license products and services to provide a high level of security throughout the process, including:

• Document authentication of "foundation documents" used to obtain an enhanced driver license;
• Applicant data verification that will be used by interviewers to confirm the data presented by applicants, including name, address or date of birth;
• 1:many facial recognition-based biometrics to screen out duplicate ID fraud, which is part of the gated issuance process to coordinate the back-end screening process and release the enhanced driver licenses to production; and
• Production of the enhanced driver license at a secure, centralized facility.

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 production of more than 60 million personal identification documents, including two-thirds of U.S. driver licenses and IDs for more than 25 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 6,000 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 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-K for the year ended December 31, 2006, in Part II, Item 7 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 II, Item 9A 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.