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The Ugliness of Privacy Notices
I haven't read the article so I'm surmising that the filters we're talking about are trying to determine the content of files in transit and P2P systems might fight back by encrypting the files.
Given those sets of circumstances there is no way that watermarks in encrypted files can be detected. It doesn't work that way - encryption algorithms are designed to prevent any information whatsoever about the cleartext from being ascertained by examining the ciphertext.
Now it's true that watermarks survive analog->digital->analog conversions. And they would certainly survive cleartext->encrypted->decrypted transformations since these are lossless. But if watermarks could be designed that could be detected in encrypted streams this would imply fundamental flaws in encryption algorithms that would open them up to all sorts of attacks... I think you're misunderstanding the way the technology is used.
A watermark might survive encryption, that is be present in the content after decryption.
However, the use of encryption will disguise that watermark in the encrypted content. That is to say: if content is encrypted, the watermark will be undetectable in the encrypted stream.
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