This document proposes a robust dynamic watermarking scheme to embed a signature in the finite state machine (FSM) of a sequential circuit design at the behavioral level for intellectual property protection. The watermark is embedded by modifying state transitions of the FSM based on a pseudorandom sequence generated from the signature. During detection, the ownership can be verified by extracting the watermark embedded in the state transitions by running the FSM or making it part of a test kernel. This scheme aims to make the watermark robust against attacks like state reduction compared to existing static watermarking techniques.