In the past decade, the business community has embraced the capabilities of the Internet to provide a multitude of services that involve access to data and information. Of particular concern to these businesses has been the protection and authentication of digital data as they are distributed electronically. We propose a novel approach that combines the reactive rule-based scheme of an active database management system (ADBMS) with the technology of digital watermarking to automatically protect digital data. The ADBMS technology facilitates the establishment of event-condition-action (ECA) rules that define the actions to be triggered by events under certain conditions. These actions are the generation of unique watermarks and the tagging of digital data with unique signatures. Watermarking is a technology that embeds, within the digital data’s context, information identifying its owner. The integration of these two technologies provides a powerful mechanism for protecting digital data in a consistent and formal manner.