Digimarc Prevails in Georgia Driver License Dispute; Court disallows prior contract award to Viisage

BEAVERTON, Ore.--Dec. 2, 20047, 2004--Digimarc Corporation today announced that the Fulton County Superior Court in Georgia has disallowed the State's 2002 driver license contract award to Viisage, finding that "there were significant instances of misconduct and misrepresentation by Defendant Viisage." The Court's ruling clears the way for the State to re-bid the contract and for Digimarc to compete to retain the State of Georgia's driver license business.

"Digimarc has served Georgia well for over 20 years. We look forward to participating in a fair procurement and offering our valued customer the latest innovations in driver license issuance systems, security and document quality," said Bruce Davis, chairman and CEO, Digimarc Corporation. "The procurement regulations are designed to provide an award of a contract such that the citizens of Georgia can achieve the best driver licenses in terms of quality, security and cost effectiveness, which Digimarc remains ready to deliver better than any other supplier. The Court has validated Digimarc's assertion that the competitor's questionable business practices created unnecessary expenses and legal difficulties for the State."

In its ruling, the Court also disallowed $2 million of a previously-announced $2.5 million settlement of Viisage's claim for an $8.2 million termination payment, allowing only a $500,000 payment for certain equipment that had been provided to the State.

The Court found, among other things, that:

-- price proposals in the original bid were prematurely opened, violating the State's own procurement rules;

-- "inappropriate and unauthorized communications" occurred between Viisage and certain State employees after the premature reading of the price proposals;

-- that Viisage's "temporary card sample tore easily" and its "permanent card samples easily delaminated and that the information on the card could be easily altered";

-- Viisage submitted another vendor's sample cards, which it did not have permission to use, in an attempt to submit acceptable permanent card samples;

-- "key representatives of Defendant Viisage did not know how these card samples were made or whether Defendant Viisage was, in fact, capable of making the cards it proposed ...;" and that

-- Viisage "misrepresented the existence of a back-up card production facility" in its bid submission.

For more details, see the complete text of the Court's order on our website at: http://www.digimarc.com/docs/GeorgiaRuling.pdf

About Digimarc

Digimarc Corporation , based in Beaverton, Oregon, is a leading supplier of secure media solutions used in a wide range of security, identification and digital media content applications. Digimarc provides products and services that enable the production of more than 60 million personal identification documents and driver licenses per year in 32 U.S. states and the District of Columbia and 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 185 issued U.S. patents with more than 3,000 claims, and more than 350 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; San Francisco, California; and the Washington DC area; and European offices in London. Please go to www.digimarc.com for more company information.