Microsoft has been granted a patent for a digital-watermarking technology that could be used to protect digital content even when it is distributed without DRM protection by embedding inaudible digital watermarks directly into an audio file, allowing the owner to be traced. Apparently, the watermark is scattered throughout the file so it's more difficult to identify or manipulate and it's able to be compressed while remaining intact. It also remains intact even after converting an audio to analog and then back to digital. An excerpt of the patent reads:

"The watermark identifies the content producer, providing a signature that is embedded in the audio signal and cannot be removed. The watermark is designed to survive all typical kinds of processing and malicious attacks."
While watermarking isn't encryption and it doesn't necessarily prevent unauthorized playback, Microsoft’s “stealthy audio watermarking” tech could help authorities identify content owners and crack down on illegal trading. Furthermore, devices could be designed to refuse to play a file that isn’t properly watermarked.