Digimarc Paves the Way for Digital Video Copy ControlWith Three Watermarking Patents.

PORTLAND, Ore.--(BUSINESS WIRE)--June 22, 1998--Extending its leadership using digital watermarks to solve real world problems, Digimarc Corporation today announced it has been awarded three patents.

The new patents address key claims that can be applied to reducing illegal copying of DVD-format movies one of the major issues holding up the development of a replacement to VCRs.

Key advances include: concentrating watermark signal strength in image areas where it is best concealed from human vision; selectively disabling of the recording capability of a DVD player; and making digital watermarks more robust so they can withstand various forms of corruption.

The Patents include US Patent No. 5,748,763: Image Steganography System Featuring Perceptually Adaptive and Globally Scalable Signal Embedding; US Patent No. 5,748,783: Method and Apparatus for Robust Information Coding; and US Patent No. 5,745,604: Identification/Authentication System Using Robust Distributed Encoding.

With these additions to its already impressive list of patent awards, Digimarc continues to drive the digital watermarking market with technology designed to ensure robust, yet visually inconspicuous, digital watermarks that can be used to enhance tracking, identification and management of digital images.

"One of the key issues impeding the development of a replacement for VCRs is the threat of illegal copying of DVD-format movies," said Bruce Davis, president and CEO of Digimarc. "These recent patent awards provide the building blocks for creating a video watermarking copy protection solution that reduces the threat of copying DVD movies."

Digimarc has partnered with Macrovision Corporation (NASDAQ:MVSN) to jointly develop a watermark-based digital media copy protection solution that addresses digital-to-digital copying issues associated with the next generation of DVD and digital videocassette recording devices.

The two companies have presented their joint proposal to the Copy Protection Technical Working Group (CPTWG) and are currently working on prototype systems.

US Patent No. 5,748,763: Image Steganography System Featuring Perceptually Adaptive and Globally Scalable Signal Embedding

This landmark patent, issued May 5, 1998, covers the concept of scaling the relative strength of the embedded digital watermark signal in accordance with image characteristics and user parameters.

This patent shows how a digital watermark can be heavily encoded, yet remain visually imperceptible, by concentrating the watermark signal strength in image regions where it is best concealed from human vision.

"This innovation is particularly important for the DVD video industry, where Hollywood studios are seeking means to robustly embed ownership and copy control information without compromising quality. Solving this problem is a prerequisite to continuing to release hit movies in the next generation DVD recordable format," said Davis.

The '763 patent also advances Digimarc's leadership in the field of watermark-based machine control, which includes using watermarks to selectively disable the recording capability of a DVD player. This feature is expected to play a key role in the future of DVD video.

US Patent No. 5,748,783: Method and Apparatus for Robust Information Coding

The '783 patent, issued May 5, 1998, makes it easier to detect watermarks, even after the video has undergone various forms of corruption that might occur in normal distribution or illegal duplication. The key to Digimarc's patented system is representing the watermark data as rotationally symmetric patterns (wavelets) that can be read from an image even if the image is reduced or rotated.

"This patent illustrates Digimarc's cutting-edge technical leadership, as it is the first to apply wavelet technology to digital watermarking applications. It is a harbinger of a new era of improved robustness in digital watermarking," said Davis.

The '783 patent also shows how watermark data can be better concealed by transforming and processing the data in a "complimentary domain" prior to embedding it enabling the digital watermark to be inconspicuously dispersed throughout the image. The result is a more robust digital watermark that can withstand most common forms of image corruption.

US Patent No. 5,745,604: Identification/Authentication System Using Robust Distributed Encoding

The '604 patent, issued April 28, 1998, was filed more than four years ago. The patent enables a system to redundantly encode watermark data throughout an image and tailor the strength of the watermark to the image's characteristics an approach that concentrates the watermarked signal strength to areas of the image where it's least visible.

This patent is also the first to use domain transformations as part of digital watermarking systems, which eases watermark decoding while also strengthening it against various forms of image corruption. The '604 patent extends beyond still and video image watermarking systems to include emulsion film-based systems (e.g. where photographic film is pre-processed to embed digital data).

About Digimarc Corporation

Founded in 1995 and headquartered in Portland, Oregon, USA, Digimarc Corporation is recognized as the world leader in digital watermarking applications. The company's patented technology is used to authenticate, track, manage and enhance visual communications.

Digimarc's customers use its products as part of their copyright protection programs, to manage rights and licensing of their images, and to enhance their company's e-commerce and marketing efforts. By partnering with its customers, Digimarc continues to develop ways to enhance the functionality of images.

More than 90 percent of professional image editing software being distributed worldwide now includes Digimarc's PictureMarc" tools. The company's products are bundled with software from such OEM partners as Adobe Systems Incorporated, Corel Corporation and MICROGRAFX Inc.

Digimarc's family of products and services include: PictureMarc, a set of Adobe Photoshop compatible plug-ins to read and embed Digimarc watermarks; MarcCentre, an online registry of contact information; MarcSpider, the first service that searches the Web for Digimarc watermarked images; BatchMarc Pro, batch watermarking software for use with large image collections; and the Digimarc Watermarking SDK, providing developers the tools to integrate Digimarc Watermarking into products and applications.

For more information visit the Digimarc web site at www.digimarc.com or contact the company at info@digimarc.com or 503/968-2908.

Note to Editors: Digimarc, MarcCentre and MarcSpider are registered trademarks and PictureMarc and BatchMarc Pro are trademarks of Digimarc Corporation. All other company and product names mentioned in this release are the property of their respective owners.

CONTACTS: Technology Solutions

Molly Mulloy, 408/280-6000 ext. 202

mmulloy@tsipr.com

or

Digimarc Corporation, Portland

Lawrence Logan, 503/968-2908 ext. 119

logan@digimarc.com