An image watermarking method includes a color transform on RGB image data to derive CMYK image data that define a constant K image. Variable infrared (IR) mark data defining an IR mark are received and a sparse two-dimensional pattern of black pixels is defined that corresponds to the variable IR data, e.g., using Gold codes or pseudorandom binary sequences. A watermarked black separation K″ is defined by embedding the sparse two-dimensional pattern into the constant K black separation K′ while maintaining local average levels. A watermarked image includes the watermarked black separation K″ in combination with the CMY separations of the constant K image. A decoding process includes using an IR microscope fitted with IR LEDs and an IR pass filter to capture an IR image, which is subjected to exposure correction, thresholding, and dilation operations to extract the two-dimensional pattern for subsequent correlation processing.