Nebraska Expands Digital Watermarking Deployment in the Fight Against Fake IDs; Nebraska DMV Deploys Digimarc Document Inspector System to Authenticate Driver Licenses

This summer, Nebraska plans to put new Digimarc Document Inspectorunits into production at DMVs across the State, arming front-officeoperators with the tools to inspect and positively authenticate themillions of U.S. driver licenses secured with Digimarc IDMarc digitalwatermarking. Authentication will occur when Nebraska and other Statedriver licenses are presented as proof of identity to obtain a new orrenewal driver license. This includes licenses from neighboring Statessuch as Colorado, Iowa, Kansas and Wyoming - effectively removing theguesswork that can come with visually inspecting an out-of-state ID.

Digimarc anticipates that more than one in three driver licensesissued in the U.S. in 2006 will carry the IDMarc feature.

The rollout of new digital watermark authentication capabilitiesin Nebraska follows the State's successful pilot of the technologyunder a grant from the U.S. Department of Transportation. Conducted in2005, the pilot enabled law enforcement, retailers and the NebraskaDMV to inspect and authenticate Nebraska driver licenses secured withdigital watermarking-based security features.

"We were honored to have participated in the Department ofTransportation driver license authentication pilot, which gave ourstaff, the police and retailers a new and very effective tool forauthenticating Nebraska driver licenses and preventing under-aged kidsfrom obtaining or using fake IDs to purchase alcohol and drive," saidBeverly Neth, director, Nebraska Department of Motor Vehicles. "As aresult of that important program, we are pleased to extend the successof the pilot into our day-to-day operations and continue the work westarted to keep our citizens' identities and our State's roads safe."

"Nebraska's use of IDMarc digital watermarking demonstrates howleading jurisdictions are employing new tools to fight IDcounterfeiting, reduce the purchase of age-restricted products, suchas alcohol, and enhance traffic safety," said J. Scott Carr, executivevice president, Digimarc. "By extending the technology into all of itsDMV branches, Nebraska continues to lead the charge by States toprotect citizens from identity theft and fraud and improve the safetyof travel on streets and highways."

In 2003, Nebraska was one of the first States in the country toincorporate the covert IDMarc security feature into its licenses toenhance security and fight counterfeiting and identity theft. Today,more than 60% of valid driver licenses in Nebraska are secured withthe feature, and Digimarc anticipates that by the end of the year anestimated 80% will be secured with IDMarc.

For more information about Nebraska's leadership in driver licenseauthentication and security, please visitwww.digimarc.com/secureid/casestudies.asp. Nebraska will discuss itsexperiences with the pilot at the upcoming AAMVA Region III conferenceto be held in Omaha, Nebraska, July 11-13, 2006.

About Digimarc

Digimarc Corporation (NASDAQ: DMRC), based in Beaverton, Oregon,is a leading supplier of secure identity and media managementsolutions. Digimarc provides products and services that enable theannual production of more than 60 million personal identificationdocuments, including two-thirds of U.S. driver licenses and IDs formore than 20 countries. Digimarc's digital watermarking technologyprovides a persistent digital identity for various media content andis used to enhance the security of financial documents, identitydocuments and digital images, and support other media rightsmanagement applications.

Digimarc has an extensive intellectual property portfolio, withmore than 260 issued U.S. patents with more than 5,000 claims, andmore than 500 pending patent applications in digital watermarking,personal identification and related technologies. The Company isheadquartered in Beaverton, Oregon, with other U.S. offices inBurlington, Massachusetts; Fort Wayne, Indiana; and the Washington DCarea; and international offices in London and Mexico. Please go towww.digimarc.com for more company information.

Securities Safe Harbor

With the exception of historical information contained in thisrelease, the matters described herein contain certain "forward-lookingstatements" that are made pursuant to the "safe harbor" provisions ofthe Private Securities Litigation Reform Act of 1995. Suchforward-looking statements include statements regarding the expecteddeployment and benefits of the Digimarc Document Inspector and theexpected increase in the number of driver licenses that includeDigimarc IDMarc digital watermarking, and other statements containingthe words "believes," "expects," "estimates," "anticipates," "will" orwords of similar import or statements of management's opinion. Thesestatements are subject to certain assumptions, risks, uncertaintiesand changes in circumstances. Actual results may vary materially fromthose expressed or implied from the statements herein or fromhistorical results, due to changes in economic, business, competitive,technological and/or regulatory factors. More detailed informationabout risk factors that may affect actual results is set forth infilings by Digimarc with the Securities and Exchange Commission onForms 10-K, 10-Q and 8-K, including but not limited to those describedin the Company's Form 10-Q for the quarter ended March 31, 2006, inPart I, Item 2 thereof ("Management's Discussion and Analysis ofFinancial Condition and Results of Operations") under the captions"Liquidity and Capital Resources" and "Factors Affecting ForwardLooking Statements" and in Part I, Item 4 thereof ("Controls andProcedures"). Readers are cautioned not to place undue reliance onthese forward-looking statements, which reflect management's opinionsonly as of the date of this release. Except as required by law, weundertake no obligation to revise or publicly release the results ofany revision to these forward-looking statements.