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Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
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<SEC-DOCUMENT>0001144204-08-052392.txt : 20091211
<SEC-HEADER>0001144204-08-052392.hdr.sgml : 20091211
<ACCEPTANCE-DATETIME>20080911170949
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001144204-08-052392
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20080911

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			DOCUMENT SECURITY SYSTEMS INC
		CENTRAL INDEX KEY:			0000771999
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373]
		IRS NUMBER:				161229730
		STATE OF INCORPORATION:			NY
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		36 WEST MAIN ST
		STREET 2:		SUITE 710
		CITY:			ROCHESTER
		STATE:			NY
		ZIP:			14614
		BUSINESS PHONE:		585 232 1500

	MAIL ADDRESS:	
		STREET 1:		36 W MAIN ST
		STREET 2:		SUITE 710
		CITY:			ROCHESTER
		STATE:			NY
		ZIP:			14614

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	NEW SKY COMMUNICATIONS INC
		DATE OF NAME CHANGE:	19920703

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	THOROUGHBREDS USA INC
		DATE OF NAME CHANGE:	19861118
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
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  <head>
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  <body bgcolor="#ffffff">
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">September
      11, 2008</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">VIA
      EDGAR</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Securities
      and Exchange Commission </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">100
      F
      Street, NE </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Washington,
      D.C. 20549 </font></div>
    <div align="left">
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="middle" width="7%">&#160;</td>
            <td align="left" valign="bottom" width="1%">&#160;</td>
            <td align="left" valign="middle" width="92%">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="top" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Attention:</font></div>
            </td>
            <td align="left" valign="bottom" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;</font></div>
            </td>
            <td align="left" valign="top" width="92%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Kari
                Jin</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Kathleen
                Collins</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="middle" width="7%">&#160;</td>
            <td align="left" colspan="2" valign="middle" width="93%">&#160;</td>
          </tr>
          <tr>
            <td align="right" valign="top" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Re:</font></div>
            </td>
            <td align="left" valign="bottom" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;</font></div>
            </td>
            <td align="left" valign="top" width="92%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Document
                Security Systems, Inc. (the &#8220;Company&#8221;)</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Form
                10-K for Fiscal Year Ended December&#160;31, 2007 Filed March&#160;17,
                2008</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dear
      Staff: </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      behalf
      of Document Security Systems, Inc., this letter responds to the comments of
      the
      staff (the &#8220;Staff&#8221;) of the Securities and Exchange Commission (the &#8220;Commission&#8221;)
      to the filing of the above-referenced annual report (the &#8220;Filing&#8221;), which were
      included in the Staff&#8217;s letter dated August 13, 2008 (the &#8220;Staff Letter&#8221;).
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      this
      letter, we have reproduced your comments and have followed each comment with
      our
      response. The numbered paragraphs of this letter set forth below correspond
      to
      the numbered paragraphs of the Staff Letter. References in the responses to
      &#8220;we,&#8221; &#8220;our,&#8221; &#8220;Company&#8221; or &#8220;us&#8221; mean Document Security Systems, Inc.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 18pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>1.</em></font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>We
                note your response to prior comment 2 where you indicate that the
                decision
                to capitalize the Company&#8217;s patent defense costs was based on the
                assumption that the patent infringement lawsuit against the ECB will
                ultimately be successful. Please explain further the following regarding
                your assessment of success:</em></font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Describe,
                in detail, specific compelling evidence you relied on at the outset
                of
                your infringement case to support your assertion that it is probable
                the
                Company will prevail in the
                case.</em></font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Response:</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      evidence that supports our case is extensive, with many of the documents being
      very technical and/or subject to attorney-client privilege or only
      understandable to those knowledgeable in the art of printing. As a summary,
      the
      Company&#8217;s confidence in the ultimate success of our case is based on two basic
      facts. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">First,
      the Company&#8217;s case is based on a relationship of the inventor of the Company&#8217;s
      patent, and the inventor&#8217;s predecessors, with various representatives of
      European currency printers, consultants, and other participants during the
      late
      1990&#8217;s in regard to the industry&#8217;s attempts to defeat new advanced levels of
      copier and scanning technologies that were then emerging in the marketplace.
      The
      inventor of the DSS&#8217;s patent had a proven history of success in
      anti-counterfeiting technology, and was seen as a source for these industry
      participants to help solve these challenges. The Company believes that it can
      establish a direct link between these communications and the unauthorized use
      of
      the technology by these industry participants in the design and production
      of
      the Euro, which was designed in the late 1990&#8217;s and was initially released for
      circulation in 2002.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
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      <div>&#160;</div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Prior
      to
      filing the case, we completed transactions with several persons and entities
      who
      had owned various degrees of economic rights associated with any proceeds from
      a
      successful litigation action associated with the infringement of&#160;several
      patents, including the patent at issue in&#160;our case against the European
      Central Bank (&#8220;ECB&#8221;). We entered into these transactions with the specific
      purpose of pursuing litigation against infringers of these patents, based on
      our
      analysis of the potential infringement situations, and our understanding of
      the
      historical relationship between the inventors and the potentially infringing
      parties.</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div>
    <div>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      addition, prior to filing&#160;the ECB litigation, the Company consulted
      extensively with legal counsel and experts and performed extensive due diligence
      with our legal counsel and experts&#160;for approximately one year to analyze
      the merits of our patent infringement case, and only after these efforts did
      we
      take our legal counsel&#8217;s and experts&#8217; recommendation to proceed with the ECB
      Litigation.</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      The
      costs of this work was expensed as incurred. During this time, the
      Company</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">,
      its
      legal counsel, and various industry experts&#160;concluded that the Company&#8217;s
      patented solutions for creating a moire effect in copied documents are evident
      in very specific areas of the artwork on the various Euro banknotes. These
      areas
      of artwork contain printed lines in the exact frequencies and configurations
      that our inventor discovered and patented as the method to create distractions
      in a copied version of the note. Furthermore, these lines have no artistic
      or
      other value, other than as an anti-counterfeiting measure, as they do not adhere
      to the depth and the dimensions of the art. (i.e.- the design of a bridge which
      does not adhere to dimensional rules for the specific purpose of containing
      lines in the banknote that are at the same frequencies and configurations of
      the
      Company&#8217;s patent). </font><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
      was
      part of the evidence that led the Company&#8217;s legal counsel, McDermott, Will &amp;
Emery LLP (&#8220;MWE&#8221;), to express confidence in the Company&#8217;s infringement case.
      While much of the communications between the Company and MWE are subject to
      attorney-client privilege, the following quote was provided by MWE for inclusion
      in a press release issued by the Company on March 30, 2006, which was filed
      with
      the Securities and Exchange Commission on Form 8-K on March 30, 2006, and
      therefore is not subject to attorney-client privilege:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Larry
      Cohen of the law firm McDermott Will &amp; Emery UK LLP, representing DSSI in
      the lawsuit, said "We have reviewed the ECB&#8217;s prior art and other submissions
      and we are confident that we can prevail. The ECB will have to persuade the
      various European Courts to overturn the Technical Board of Appeal of the
      European Patent Office&#8217;s previous ruling as well as explain how a 1979 Swiss
      bank note was designed with a device to show up digitally scanned material
      using
      color copiers and digital scanners when we understand there were none in
      existence at that time. We welcome their filing since now we know what they
      will
      be throwing at us and we believe we can deal with it.&#8221;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
      quote of Larry Cohen is consistent with advice provided by MWE prior to&#160;and
      after&#160;the filing of the lawsuit by the Company. The Company views the
      willingness of a firm such as MWE to publicly state its confidence in the case
      as out of the ordinary and an indicia of the strength of the case. MWE&#8217;s
      confidence in the case was a factor in the Company determining that it would
      likely be successful in the litigation. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">2</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
      <div>&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Taking
      into account the above-referenced information and upon advise of legal counsel
      and experts in the field prior to the filing of the lawsuit, the Company
      determined that it had a valid patent and that the defendant&#8217;s products
      contained the technology on an unauthorized basis in an infringing manner.
      Accordingly, the Company was confident at the outset of its case that it would
      prevail.</font><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Tell
                us how you applied this evidence when you -</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em><u>initially</u></em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>
                began deferring the patent defense costs</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em><u>
                and</u></em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>
                how you concluded on a continuing basis that success of the infringement
                case was probable. Describe any material changes in circumstances,
                assumptions, or factors considered throughout the process and their
                impact
                on your probability
                assessment.</em></font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Response:</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      based
      our decision to defer the costs associated with this case on the principal
      that
      successful patent defense costs are capitalizable. Based on the evidence
      described above, and the advice of our counsel and experts, we have believed
      from the outset of this case that we will be able to prove in court that the
      ECB
      infringed our patent on its Euro notes by using our technology in the design
      of
      the notes for the specific purpose of making the notes difficult to copy, and
      therefore our infringement case would be successful. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Since
      the
      case was filed, the Company has not seen any evidence from the ECB that
      specifically addresses the Company&#8217;s infringement assertions. Thus far in the
      case, the ECB&#8217;s efforts in response to the suit has been a) challenge the
      patent&#8217;s validity, and b) challenge the jurisdiction of the infringement suit.
      These tactics have made the case more expensive and time consuming than
      originally forecasted by the Company. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      most
      significant events in the case since it was filed have been the challenges
      of
      patent validity by the ECB. The Company believes that the ECB&#8217;s challenge of
      patent validity represents the biggest hurdle to a successful outcome. To date,
      there have been two adverse rulings and two positive rulings in regard to the
      patent&#8217;s validity. As described below and in our previous response to the Staff,
      the European court system for patent disputes is unique as it separates
      jurisdiction to its member states despite a having unified patent application
      and approval system. As a case in point, on March 26, 2007, the Company&#8217;s patent
      was deemed invalid in the United Kingdom and then on the immediately following
      day, </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">on
      March
      27, 2007, the Company&#8217;s patent was ruled as valid in Germany. In addition, on
      January 9, 2008 the French Court held that the patent was invalid in France
      for
      the same reasons given by the English Court. On March 12, 2008 the Dutch Court,
      having considered the English, German and French decisions, ruled that the
      Patent is valid in the Netherlands.</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      addition, all of the technical aspects of the patent were deemed valid by every
      European court that has ruled on the validity of the patent, including the
      Franch and UK courts. The only validity issue of the patent that the French
      and
      UK courts ruled against us was a patent procedural process called &#8220;added
      matter&#8221;, which is subjective in nature. Therefore, the Company was successful in
      all courts on the technical merits of the patent (obviousness, prior art, etc.)
      The courts in Germany and the Netherlands held that the &#8220;added matter&#8221; was
      procedurally proper, as well as approving all technical aspects of the patent.
      The importance of the technical aspects of the patent will weigh more in the
      forthcoming infringement trials as our experts and the courts have all agreed
      that the patent meets all technical requirements.</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">When
      we
      assess the impact of these decisions, the Company understands that the adverse
      rulings on validity mean that the Company will not be able to file infringement
      lawsuits in those jurisdictions, and assessed these material changes in its
      analysis of the potential proceeds of its case. Had the Company experienced
      its
      loss in the United Kingdom in a reporting period prior to its win in Germany,
      then the Company would have&#160;considered the need to record an impairment on
      its asset. However, the win in Germany, which has the largest volume of
      circulation of the European banknotes, had a significant positive impact on
      the
      Company&#8217;s analysis of cash flows associated with the case. Furthermore, the
      Company understands that a successful infringement ruling in any one of the
      jurisdictions of the European Union will have a similar impact as if the Company
      was successful in all of the jurisdictions of the case, since the ECB would
      have
      to either remove the technology from its banknotes, produce different banknotes
      depending on the jurisdiction in which the banknote is circulated or pay a
      licensing fee to continue to use the Company&#8217;s patented technology. The Company
      believes that if it is successful in its litigation against the ECB, the ECB
      would address the going-forward use of the Company&#8217;s technology in its
      banknotes, either through a license or settlement, regardless if the Company
      wins in one jurisdiction or all nine. Regardless of the ECB&#8217;s decision on how to
      address a going-forward usage of the Company&#8217;s technology, if the Company is
      successful in its litigation against the ECB, a court would impose damages
      on
      the ECB for prior, unauthorized usage of the Company&#8217;s patent.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        </div>
      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">3</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
      </div>
      <div id="HDR">
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      </div>
      <div>&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Furthermore,
      as the case has progressed, the Company has recently received an opinion by
      another expert - this expert based in Germany, where&#160;the patent has been
      held valid,&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">and
      applying German law - that supports its infringement claims. In addition, the
      Company has recently entered into an agreement with a third party investor
      which
      will provide significant funds towards the pursuit of the Company&#8217;s current and
      future validity and infringement claims in exchange for 50% of the gross
      proceeds. The Company filed a Form 8-K with the Securities and Exchange
      Commission on August 20, 2008 describing this transaction. Prior to entering
      into this agreement, the investor and its legal team performed significant
      due
      diligence into the merits of the Company&#8217;s case, including extensive discussions
      with the Company&#8217;s legal team, experts, and others involved in the case. The
      Company believes that the decision of the investor to put forth substantial
      resources into the case further supports the Company&#8217;s belief that it will be
      successful in its case. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font size="2">&#160;</font></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Explain
                further how the Company determined that victories on the validity
                trials
                in certain jurisdictions are &#8220;strong indicators&#8221; that you will be
                successful in the infringement case and how you determined the probability
                of such success. Further tell us how your analysis for probability
                of
                success is impacted when you lose the validity cases in other
                jurisdictions.</em></font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Response:</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      discussed above, the Company believes that it will be able to prove infringement
      of its patent. Overcoming the hurdles of the validity challenges are a threshold
      issue to allow the Company to move to trial on infringement. As described above,
      the Company believes that its infringement case needs only to be successful
      in
      only one of the ECB&#8217;s jurisdictions in order to successfully extend the economic
      benefits of the patent, and as a result, losing one or more validity cases
      does
      not impact the Company&#8217;s assessment that it will be successful in its
      infringement suit in the jurisdictions where its patent has been held valid
      (i.e., Germany and The Netherlands to date). The effect of success in any of
      these jurisdictions or others will have the same impact as if the European
      Union
      has a unified patent court system. The loss of a validity case does have an
      impact on the potential proceeds from a settlement with the ECB, and as
      described below and in previous responses to the Staff, the Company assesses
      the
      overall impact on recoverability of the capitalized expenses by the loss of
      potential proceeds from these jurisdictions. A series of validity losses could
      have caused the Company to abandon the case&#160;if the Company determined that
      the cost of continuing the suit was no longer justified. However, based on
      victories in two of the largest jurisdictions&#160;that use the
      Euro&#160;(Germany and the Netherlands) and the potential proceeds associated
      with these jurisdictions, the case has not reached the point where the overall
      costs have exceeded its potential future economic benefit. </font><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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      </div>
      <div>&#160;</div>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 36pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Clarify
                when the infringement trial will begin and confirm that this case
                will be
                tried in only one court (e.g. the Court of First
                Instance.)</em></font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Response:</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      case
      will not be heard in the Court of First Instance because this court ruled that
      is was not the correct venue for the infringement lawsuit. The Company was
      in
      the process of determining the best jurisdiction to file an infringement case
      when it entered into an agreement with a third party, described above, that
      appointed that third party with the right to file infringement lawsuits in
      this
      matter on behalf of the Company and the third party, with the Company to receive
      50% of any gross proceeds of such litigation. The third party is free to file
      infringement lawsuits in any country where the patent is valid, including
      multiple countries concurrently. <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company has filed an infringement lawsuit in Belgium in order to preserve its
      rights in that country with respect to statute of limitation concerns. The
      Company is scheduled to file a brief in May 2009 with respect to infringement.
      An infringement trial in Belgium will not occur until at least the second half
      of 2009, and perhaps much later.</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 18pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>2.</em></font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>In
                your response letter dated June 20, 2008 (comment 3) the Company
                indicates
                that your discussion of probability factors in your letter dated
                May 9,
                2008 was in the context of the methodology used to test for impairment.
                We
                refer you to your statement, &#8220;It is the Company&#8217;s basic premise that
                </em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em><u>when
                an infringement case</u></em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>
                has reached the trial stage, then the </em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em><u>probability
                of a win in such a case</u></em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>
                will be 50%. </em></font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 54pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 54pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>It
                is still unclear why the probability factors included in your impairment
                analysis would differ from your assessment regarding the probability
                of
                success in the infringement litigation. Please explain</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Response:</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company believes that the assessment of success in a patent infringement case
      and the assessment of impairment are mutually exclusive analysis. As described
      above, the Company&#8217;s assessment of its potential for success in its infringement
      suit is based on the case&#8217;s evidence and advice of counsel and experts. The
      Company has followed the concept that once the decision to capitalize the patent
      infringement costs has been made, then subsequent events that do not change
      the
      nature of the asset should be analyzed in the context of impairment testing.
      The
      Company believes that this concept is consistent with the decision to capitalize
      other long-lived assets, such as production equipment or other intangible
      assets, where the decision to capitalize is based on the nature of the cost
      while the decision to write-down the asset is based on the estimated economic
      recovery of the asset. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In&#160;our
      analysis of impairment, the Company recognizes that it does not know the timing
      or the amount of proceeds from a successful outcome of the litigation with
      a
      high degree of certainty. The Company has used conservative estimates in its
      analysis to allow for uncertainty. The Company notes that in its previous
      response, the statement &#8220;probability of a win in such a case will be 50%&#8221; is
      confusing. The Company should have&#160;stated that the probability placed on
      the cash flows is 50% once it enters the trial stage. The Company does not
      believe it is appropriate to analyze an asset for impairment using only the
      best-case scenario. Therefore, in its impairment analysis it presents weighting
      factors to assess the margin of error in its estimates of timing and amount
      that
      support the asset amount. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
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        </div>
      </div>
      <div>&#160;</div>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 54pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Explain
                how these probability factors were used in your impairment analysis.
                In
                this regard, we note your calculations of the potential proceeds
                to be
                received in the ECB litigation in your response to our prior comment
                2;
                however, there does not appear to be any probability notation factored
                into your calculations. Please
                explain.</em></font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Response:</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      described above, the Company uses weighting factors in its impairment analysis
      in order to assess the margin of error in its estimates of timing and amount
      that support the asset amount. In our calculation included in the previous
      response, we used a column in the analysis labeled &#8220;Error Discount Factor&#8221; to
      highlight this concept</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>.</em></font><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 18pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>3.</em></font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Describe
                the nature of the future cash flow stream of the Company reasonably
                expects to generate, if any, assuming it&#8217;s victorious in the infringement
                litigation. That is, does the Company expect the ECB to enter into
                a
                long-term license for the patented technology and, if so, what&#8217;s the basis
                for that expectation? What factors would affect the amount of such
                a cash
                flow stream?</em></font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Response:</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company will seek a lump-sum payment for all past uses of the infringed patented
      technology, and then will seek an on-going license fee for the continued use
      of
      the patented technology. The Company expects that the ECB will choose to pay
      the
      ongoing license fees rather than redesign the Euro bank notes to not include
      the
      patented technology. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company&#8217;s basis for this expectation is based on its understanding of the
      security printing business. The Company has a long history of licensing its
      other patented technology to commercial security printers for use in commercial
      and governmental documents in the same manner (% of sales) that it expects
      the
      ECB to pay, either via court decision or a license fee settlement. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 18pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>4.</em></font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>We
                note your response to prior comment 4 in your letter dated June 20,
                2008
                where you indicate that the UK trial incurred the bulk of the legal
                expense for the development of the core legal arguments that are
                used
                throughout the cases in all the other jurisdictions. You refer to
                your
                &#8220;unified asset&#8221; approach, based on a view that the Company is building a
                cumulative knowledge base throughout the various validity trials.
                However,
                it would seem that you have incurred costs that are specifically
                related
                to litigating in a particular jurisdiction, such as, for example,
                researching jurisdictional case law, preparing briefs, and filing
                motions
                uniquely jurisdictional that do not clearly benefit defense actions
                in
                other jurisdictions. </em></font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">6</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
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      <div>&#160;</div>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 54pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Explain
                to us why the cost of defense efforts incurred in connection with
                any lost
                validity case that does not clearly benefit future validity cases
                should
                not be written off. If such an amount cannot be reliably measured,
                explain
                why the entire amount associated with a lost validity case should
                not be
                written off.</em></font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Response:</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      discussed in a previous response, the Company has based its decision to
      capitalize the costs associated with its litigation efforts based on the
      guidance presented in FASB Concept Statement No. 6 and related guidance in
      AICPA
      Technical Questions and Answers, Section&#160;2260, Other Assets, paragraph .03,
      Legal Expenses Incurred to Defend Patent Infringement Suit. The Company has
      not
      interpreted this guidance to require a line-by-line allocation of legal time
      associated with each activity of the legal team to prepare, file and litigate
      in
      each jurisdiction. The Company believes that a requirement to identify exactly
      which costs incurred during a legal process were clearly beneficial to the
      overall success of a lawsuit would lead to a overly subjective process that
      would present inconsistent information to the user of the financial statement.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">From
      the
      outset, the Company&#8217;s goal was to obtain economic recovery of its lost revenue
      due to the infringement of the patent. It is our understanding that in most
      patent dispute cases, including in the United States, the settlement of patent
      dispute cases occur in one court and one jurisdiction. The Company was
      challenged by the unique circumstances that it faced by having a
      multi-jurisdictional case for the dispute of one patent. However, as discussed
      in the Company&#8217;s previous response, despite the unique circumstances of the
      European Patent system, the Company believes that the underlying economics
      of
      its multi-jurisdictional case is similar to a typical patent infringement case,
      and therefore, should be accounted for similarly. In a single jurisdiction
      case,
      it would not be unexpected that certain motions, claims, and other actions
      that
      occur during the case are not favorable to the suing party. However, if, at
      the
      end of the case, the plaintiff is victorious, then it would not be appropriate
      nor expected to disseminate the costs associated with each individual action
      within the case in order to capitalize only those costs that were clearly
      beneficial to the end result of the case. The Company believes that such a
      process would not be in accordance with the conceptual guidance that governs
      the
      capitalization of patent litigation costs. The Company believes that the same
      concepts should be applied in its case against the ECB since the overall nature
      of all of the costs incurred are based on the Company&#8217;s efforts to achieve a
      successful ruling in its patent infringement case. In addition, while the
      Company&#8217;s case is multi-jurisdictional, as explained above, a victory by the
      Company in any one jurisdiction will have the same effect on the ECB as if
      the
      Company won in all jurisdictions since the ECB uses the technology unilaterally
      throughout all the jurisdictions and could not realistically change its use
      of
      the technology based on the jurisdiction in which the banknote is circulated.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 54pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>If
                you continue to believe the incurred costs do directly benefit future
                validity cases, provide us evidence supporting that belief and the
                related
                amount.</em></font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      stated
      above, the Company believes that a process to bifurcate the costs associated
      with a patent infringement case based on whether those costs were clearly
      beneficial or not to the eventual outcome of the case is not consistent with
      the
      conceptual guidance that governs the capitalization of patent litigation costs.
      The Company believes that all of the various sub-actions of its
      multi-jurisdictional case are a necessary component of the overall case and
      should be analyzed as one &#8220;unified&#8221; asset. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: ">7</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
      </div>
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      </div>
      <div>&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For
      the
      patent validity case in the United Kingdom, which was scheduled as the first
      validity trial in the case, the Company incurred approximately $1,144,000 thru
      June 30, 2008 for approximately 1,700 hours from its law firm in the case,
      McDermott, Will &amp; Emery. Of that time, approximately 1,000 hours were for
      research, information gathering, litigation strategy, expert witness
      discussions, drafting of court documents and pleadings. The remaining 600 hours
      were for trial preparation, submittals, and trial attendance. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For
      the
      German validity case, the Company incurred approximately $235,000 thru June
      30,
      2008 for approximately 292 hours by the Company&#8217;s law firm in the case, Becker,
      Kurig &amp; Straus. Of that time, approximately 249 hours (79%) were for
      drafting and review of pleadings and for preparation, 11 hours (4%) for trial
      attendance, 8 hours (3%) for translations, with the remainder for meetings,
      communications and travel time. For the French validity case, the Company only
      incurred approximately $200,000 thru June 30, 2008 for approximately 314 hours
      by the Company&#8217;s law firm in the case, Hirsch &amp; Associates, Of that time,
      approximately 262 hours (83%) were for drafting and review of pleadings and
      for
      preparation, 10 hours (3%) for trial attendance, 8 hours (3%) for checking
      translations, with the remainder for meetings, communications and travel time.
      The costs for both of the cases were significantly less than the costs of the
      UK
      trial as a result of the carryover benefit of the research, preparation and
      documentation that was performed for the UK case. <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Furthermore,
      the Company believes that the case in France was beneficial to the overall
      case
      in that it allowed the Company to hear any new arguments that the ECB had in
      response to the Company&#8217;s victory in Germany. During this trial, the Company
      learned that the ECB&#8217;s case against validity was&#160;focused on&#160;the
      aforementioned issue of added matter. The Company believes that the issue of
      added matter has the least impact against its case of infringement. Subsequent
      to the French case, the Company was successful in its validity case in the
      Netherlands, which success was partially based on the Company&#8217;s ability to
      address the issues argued in the French court case.</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Furthermore,
      the Company does not believe that a meaningful delineation of costs incurred
      in
      each patent validity or infringement case between which costs are or are not
      clearly beneficial to the other validity cases and future infringement cases
      can
      be made for other than immaterial court or filing fess. Rather, each case is
      a
      necessary sub-component of the overall lawsuit that requires each party to
      change and adapt its arguments for each case based on the information gained
      from the previous cases, and, despite the unique circumstances presented by
      the
      European multi-jurisdictional patent system, that the costs associated with
      each
      case should be treated in a similar manner to single jurisdictional
      case.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td style="width: 18pt;">&#160;</td>
            <td style="width: 18pt;">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>5.</em></font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Please
                tell us whether you consulted with the Company&#8217;s independent auditors when
                responding to the Staff&#8217;s comments regarding capitalized defense costs and
                explain whether or not they concur with all of the views expressed
                in the
                Company&#8217;s response.</em></font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Response:</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company has consulted with our independent auditors when responding to the
      Staff&#8217;s comments and they concur with our accounting treatment</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>.</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Thank
      you
      for your assistance in this matter. Please feel free to call me at (585)
      325-3610 if you have any questions about this matter.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
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      </div>
      <div>&#160;</div>
      <div>
        <table align="center" bgcolor="#ffffff" border="0" cellpadding="0" cellspacing="0" width="100%">

            <tr valign="top" bgcolor="#ffffff">
              <td width="50%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
              <td width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
              <td width="49%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
            </tr>
            <tr valign="top" bgcolor="#ffffff">
              <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
              <td colspan="2"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Respectfully
                submitted,</font></td>
            </tr>
            <tr valign="top" bgcolor="#ffffff">
              <td>&#160;</td>
              <td colspan="2">&#160;</td>
            </tr>
            <tr valign="top" bgcolor="#ffffff">
              <td>&#160;</td>
              <td colspan="2"><font size="2">DOCUMENT SECURITY SYSTEMS, INC.</font></td>
            </tr>
            <tr valign="top" bgcolor="#ffffff">
              <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;<br>&#160;</font></td>
              <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;<br>&#160;</font></td>
              <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;<br>&#160;</font></td>
            </tr>
            <tr valign="top" bgcolor="#ffffff">
              <td>&#160;</td>
              <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">By:&#160;&#160;</font></td>
              <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">/s/
                Patrick White</font></td>
            </tr>
            <tr valign="top" bgcolor="#ffffff">
              <td colspan="2"><font size="1">&#160;</font></td>
              <td align="left">
                <hr style="COLOR: black" align="left" noshade size="2" width="80%"><font size="2">Patrick
                White</font></td>
            </tr>
            <tr valign="top" bgcolor="#ffffff">
              <td colspan="2"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
              <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Chief
                Executive Officer </font></td>
            </tr>

        </table>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
      <table align="center" bgcolor="#ffffff" border="0" cellpadding="0" cellspacing="0" width="100%">

          <tr valign="top" bgcolor="#ffffff">
            <td width="50%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
            <td width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
            <td width="49%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
          </tr>
          <tr valign="top" bgcolor="#ffffff">
            <td><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></td>
            <td colspan="2">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">__/s/
                Philip Jones</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Philip
                Jones</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Acting
                Chief Financial Officer</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Vice
                President of Finance)</font></div>
            </td>
          </tr>

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