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Identity with a Purpose

Our Nation's security and the business of security are unavoidably linked. As the implementation of the Real ID Act of 2005 remains in limbo because of various states objecting to the unfunded mandate of getting their ID documents compliant, it occured to me to look at the companies involved in a program expected to cost in excess of $10 billion. Until recently, three companies were responsible for manufacturing the drivers' licenses for all 50 states. Two, Digimarc ID Systems and L1 Identity Solutions (formerly Viisage) represented 92% of all of the licenses produced. According to the Digimarc 10-K, the company issues over 60 million ID cards worldwide annually, and yet Digimarc lost money in 2007.

L1 for its part has been aggressive in promoting itself as an identity document company and until recently was the number two company in the field, representing approximately 1/3 of all U.S. drivers licenses.

L-1 is the number two manufacturer of state driver's licenses and identification cards in the United States. Among other things, its driver license Web page touts its role in "laying the foundation for the use of face recognition technology." It is interesting to learn that this foundation is being laid.

In March, L1 announced the acquisition of the Digimarc ID business for $250 million.

Digimarc has been very aggressive in promoting the REAL ID Act. The Digimarc website has an entire section dedicated to REAL ID, and the company spent $350,000 in the first half of 2007 on federal lobbying for the national ID law. It has also hosted conferences where state DMV bureaucrats trained up to promote REAL ID. Regrettably for Digimarc, Congress hasn't funded REAL ID and not a single state complied with the May 11, 2008, deadline for implementation.

That's $250 million for a division of a company that lost money in 2007. While the information was not readily available, some private estimates suggest that L1 paid between 8 and 10 times revenue for the acquisition of this division of Digimarc. Clearly, L1 believes that the Real ID Act will eventually be implemented. Personally, I continue to believe that a uniform drivers license, or at least drivers' licenses that have a number of common security features will become reality sooner than later, and is a an important element of National security, even if it is perceived as a defacto National ID. "Just saying."