Digimarc Prevails in Another Patent Re-Examination; U.S. Patent Office Confirms Validity of 69 Claims, Including Addition of More Claims Covering Audio Watermark Technology

Business Wire, Feb 25, 2002

Business Editors

TUALATIN, Ore.--(BUSINESS WIRE)--Feb. 25, 2002

Digimarc Corporation (Nasdaq:DMRC), the world leader in digital watermarking solutions, announced another milestone in its patent licensing program today, reporting that the U.S. Patent Office re-examination of Patent Number 5,636,292 has resulted in confirmation of the validity of 69 claims.

The Company believes that several of the confirmed claims are relevant to its pending infringement litigation against Verance Corporation.

"Our enforcement actions continue to contribute to growth in our licensing program. This action, which follows on the successful conclusion of litigation against SESAC, strengthens our case in the pending Verance litigation and further increases our confidence in a favorable outcome," said Bill Conwell, vice president for intellectual property for Digimarc. "We are pleased that existing audio watermarking claims in the patent were confirmed by the Patent Office, and believe that the new patent claims further strengthen our case."

Verance is charged with infringing seven Digimarc patents in three separate lawsuits. Last year, Digimarc agreed to stay litigation in two of the lawsuits against Verance while the Patent Office further considered four of Digimarc's patents. The stayed suits alleged infringement of U.S. Patents 5,636,292; 5,850,481; 5,832,119; 6,122,392, which relate to technology for hiding digital watermarks in audio and other media objects, in a manner that is imperceptible yet survives various types of manipulation.

The `292 patent originally issued with 57 claims. During a first phase of the re-examination process, nine claims were initially rejected. Digimarc then had the opportunity to respond to the U.S. Patent Office action, amending several claims, canceling three and adding 15 more.

Patent numbers 5,636,292 and 5,832,119 have now been confirmed in Digimarc's favor and resolution of the remaining two patent re-examinations is expected shortly.

About Digimarc

Digimarc Corp. (Nasdaq:DMRC), based in Tualatin, Ore., is the leading provider of digital watermarking components and technologies used in a wide range of security, identification and brand protection applications.

Digimarc ID Systems, based in Bedford, Mass., is a leading global provider of secure and durable personal identification solutions, and is the leading producer of drivers licenses in the U.S., providing systems and services to 37 states. Internationally, Digimarc ID Systems produces personal identification documents for governments around the world.

Digimarc has an extensive intellectual property portfolio, with 51 issued U.S. patents with more than 1,000 claims, and 305 pending applications for U.S. patents, in digital watermarking, personal identification and related technologies. Please go to www.digimarc.com for more company information.

Securities Safe Harbor

This press release contains 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 are subject to certain assumptions, risks and uncertainties. Although Digimarc believes that the expectations reflected in its forward-looking statements are reasonable, actual results could differ materially from those expectations or from historical results. Important factors that could cause such differences include without limitation changes in customer needs and expectations, and governmental actions and other factors detailed in Digimarc's Annual Report on Form 10-K for 2000 and its most recent Quarterly Report on Form 10-Q, each as filed with the Securities and Exchange Commission. Digimarc is not obligated to revise or update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this release.