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Case Status:    DISMISSED    
On or around 08/07/2006 (Date of order of final judgment)

Filing Date: September 28, 2004

Plaintiffs have filed a notice of appeal in the Ninth Circuit Court of Appeals.

According to a press release dated August 23, 2006, Digimarc Corporation announced the U.S. District Court of Oregon has dismissed the final of three consolidated securities class action lawsuits that were filed against the Company and certain of its current and former executive officers, arising from accounting errors discovered by the Company in 2004 and rectified through a restatement of certain prior period financial statements. The initial securities litigation was dismissed on August 4, 2006, and the two derivative lawsuits were dismissed on May 5 and August 11, 2006.

As disclosed by the Company’s FORM 10-Q for the quarterly period ended MARCH 31, 2006, beginning in September 2004, three purported class action lawsuits were commenced against the Company and certain of its current and former directors and officers by or on behalf of persons claiming to have purchased or otherwise acquired the Company’s securities during the period from April 17, 2002 to July 28, 2004. These lawsuits were filed in the United States District Court for the District of Oregon and were consolidated into one action for all purposes on December 16, 2004. On May 16, 2005, plaintiffs filed an amended complaint. On November 30, 2005, the Court granted the Company’s motion to dismiss the amended complaint on the grounds that plaintiffs had failed to allege facts sufficient to support their allegation that the defendants knowingly or recklessly acted in violation of the securities laws. Plaintiffs filed a second amended complaint on January 17, 2006. On February 14, 2006, the Company filed a motion to dismiss the second amended complaint on the grounds that plaintiffs still fail to allege facts sufficient to support their allegation that the defendants knowingly or recklessly acted in violation of the securities laws. This motion is pending.

The original complaint alleges that throughout the Class Period, Defendants issued, or caused to be issued, false and misleading statements in violation of Sections 10(b) and 20(a) of the Exchange Act, in order to artificially inflate the value of Digimarc stock while they sold millions of dollars of their personal holdings for tremendous personal gain. Under the direction of the CFO, the Company inflated its profitability during the class period by maintaining insufficient accounting controls which created the environment where improper accounting could be used to manipulate Company financial results. The Company now admits that it improperly accounted for software development costs and project capitalization at its Digimarc ID Systems business unit. In order to correct the misleading financial statements previously issued, the Company has indicated that it will need to restate all its financial reports for 2003 and 2004, and may also be required to restate earlier periods as well. Without the improper accounting manipulations, the restatement of which the Company indicates will be in the millions of dollars, the Company may not have been able to meet analysts' earnings per share estimates during the class period. In addition, while the accounting manipulations were ongoing, Company insiders sold over $10 million of Digimarc stock. When the Company substantially missed its earnings expectations on July 28, 2004, Digimarc's stock plummeted on usually high trading volume of 653,600 shares, from its closing price of $12.07 on July 28, 2004, to a closing price of $9.04 on July 29, 2004. Analysts from Morgan Keegan & Co., D.A. Davidson & Co. and Janney Montgomery Scott, LLP all downgraded the Company.

COMPANY INFORMATION:

Sector: Technology
Industry: Software & Programming
Headquarters: United States

SECURITIES INFORMATION:

Ticker Symbol: DMRC
Company Market: NASDAQ
Market Status: Public (Listed)

About the Company & Securities Data


"Company" information provides the industry and sector classification and headquarters state for the primary company-defendant in the litigation. In general, "Securities" information provides the ticker symbol, market, and market status for the underlying securities at issue in the litigation.

In most cases, the primary company-defendant actually issued the securities that are the subject of the litigation, and the securities information and company information relate to the same entity. In a small subset of cases, however, the primary company-defendant is not the issuer (for example, cases against third party brokers/dealers), and the securities information and company information do not relate to the same entity.
COURT: D. Oregon
DOCKET #: 04-CV-1390
JUDGE: Hon. Anna J. Brown
DATE FILED: 09/28/2004
CLASS PERIOD START: 04/17/2002
CLASS PERIOD END: 07/28/2004
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Dyer & Shuman, LLP
    801 East 17th Avenue, Dyer & Shuman, LLP, CO 80218-1417
    303.861.3003 800.711.6483 · info@dyershuman.com
  2. Lerach Coughlin Stoia Geller Rudman & Robbins LLP (San Diego)
    401 B Street, Suite 1700, Lerach Coughlin Stoia Geller Rudman & Robbins LLP (San Diego), CA 92101
    206.749.5544 206.749.9978 · info@lerachlaw.com
  3. Milberg Weiss Bershad & Schulman LLP (New York)
    One Pennsylvania Plaza, 49th Floor, Milberg Weiss Bershad & Schulman LLP (New York), NY 10119
    212.594.5300 212.868.1229 · info@milbergweiss.com
  4. Paskowitz & Associates
    60 East 42nd Street, 46th Floor, Paskowitz & Associates, NY 10165
    212.685.0969 212.685.2306 · classattorney@aol.com
  5. Schatz & Nobel, P.C.
    330 Main Street, Schatz & Nobel, P.C., CT 06106
    800.797.5499 860.493.6290 · sn06106@AOL.com
  6. Schiffrin & Barroway LLP
    3 Bala Plaza E, Schiffrin & Barroway LLP, PA 19004
    610.667.7706 610.667.7056 · info@sbclasslaw.com
  7. Stoll, Stoll, Berne, Lokting & Schlachter
    209 South West Oak Street, Stoll, Stoll, Berne, Lokting & Schlachter, OR 97204
    503.227.1600 503.227.6840 · info@ssbls.com
No Document Title Filing Date
COURT: D. Oregon
DOCKET #: 04-CV-1390
JUDGE: Hon. Anna J. Brown
DATE FILED: 01/17/2006
CLASS PERIOD START: 04/22/2003
CLASS PERIOD END: 07/28/2004
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Milberg Weiss Bershad & Schulman LLP
    355 South Grand Avenue, Suite 4170, Milberg Weiss Bershad & Schulman LLP , CA 90071
    213.617.9007 213.617.9185 · info@milbergweiss.com
  2. Milberg Weiss Bershad & Schulman LLP (New York)
    One Pennsylvania Plaza, 49th Floor, Milberg Weiss Bershad & Schulman LLP (New York), NY 10119
    212.594.5300 212.868.1229 · info@milbergweiss.com
  3. Stoll, Stoll, Berne, Lokting & Schlachter
    209 South West Oak Street, Stoll, Stoll, Berne, Lokting & Schlachter, OR 97204
    503.227.1600 503.227.6840 · info@ssbls.com
No Document Title Filing Date
No Document Title Filing Date