We are using the MIP SDK to apply sensitivity labels to files (using the c# Microsoft.InformationProtection.File nuget package). We use the IFileHandler.SetLabel method for this. This seems to protect the file and apply most of the metadata as expected, except for the ContentBits metadata.
Based on the MIP SDK metadata documentation:
And based on the answer here and here, I do not expect the MIP SDK to watermark the content, but instead to add the ContentBits metadata that tells the AIP client to watermark the document.
If we have a label that is both encrypted and has a watermark, and we use the MIP SDK to apply that label to a file, the file is protected and the metadata added, however the ContentBits property is set to "8". If its a Word document, and we then open it, no watermark is applied. If we manually change the ContentBits property to "12", the Watermark is added on save.
If we use Word to manually select the same encrypted / watermarked sensitivity label from the ribbon, the document is watermarked and protected. The ContentBits metadata is set to "12".
Is this behavior expected? We tried applying the label using the AzureInformationProtection powershell module's Set-AIPFileLabel and it also sets the ContentBits property to "8". I would have expected both the MIP SDK and powershell to set the ContentBits to "12". If this isn't by design, is there a suggested work around?