Abstract: The present invention detects the presence of a watermark in-an image by using a multi-step process. First, the image is examined to determine which regions of the image have characteristics such that there is a high probability that a watermark signal can be detected in that region of the image. Next the regions that have a high probability that a watermark can be detected (in contrast to all regions of the image) are examined to find watermark data. In order to determine the probability of finding watermark data in a particular region of an image, the amount of “variance” in the intensity of the pixels in the region is first examined. For example a region that is entirely white or entirely black has zero variance in luminance. Such a region can not carry watermark data, hence regions with zero or low variance can be eliminated from further processing.