SOURCE: Digital Ally, Inc.

Digital Ally, Inc.

March 17, 2015 13:12 ET

Digital Ally Files Motion to Assert Additional Claims In Its Unfair Competition Suit Against Utility Associates, Inc.

LENEXA, KS--(Marketwired - Mar 17, 2015) -  Digital Ally, Inc. (NASDAQ: DGLY) ("Digital" or the "Company"), an industry leader in law enforcement video technology, today announced that it will amend its Unfair Competition lawsuit against Utility Associates, Inc. ("Utility") in the United States District Court for the District of Kansas, based upon testimony received at the now-continued hearing on Digital's Motion for Preliminary Injunction.

Digital has been in litigation with Utility, a self-professed Digital competitor headquartered in Georgia, for the past 18 months. That litigation began after Utility started sending letters to Digital's customers and prospective customers threatening them with suit for "patent infringement" should they continue to purchase or even use Digital's products. After Utility refused to cease these and other similarly unlawful activities, Digital filed an Unfair Competition suit against it in the Kansas federal court. At present, Digital alleges that Utility has, among other things, defamed Digital, illegally interfered with Digital's contracts, customer relationships and business expectancies, and engaged in false and deceptive advertising, all by asserting that Digital's products infringe upon the so-called Boykin '556 Patent, of which Utility is the most recent in a long series of assignees. Contemporaneously with its suit, Digital also instituted proceedings in the United States Patent and Trademark Office ("USPTO") to invalidate the '556 Patent. On October 1, 2014, the USPTO granted Digital's request for an inter partes review of that patent declaring that Digital has already "demonstrated a reasonable likelihood" of showing the unpatentability of fully 24 of the 25 "claims" appearing in the '556 patent. Digital believes that the USPTO's decision supports its contention that Utility's campaign of threatening letters and related interference and disparagement is and was unlawful.

In its Kansas suit, Digital seeks temporary, preliminary, and permanent injunctive relief, prohibiting Utility from, among other things, continuing to threaten or otherwise interfere with Digital's customers, as well as actual/consequential damages, punitive damages and attorneys' fees.

On December 29, 2014, the United States District Court for the District of Kansas denied Utility's motion to dismiss Digital's claims and on March 4, 2015, an initial hearing was held upon Digital's request for injunctive relief. During that hearing, a former Utility Vice President testified at length. Her testimony not only confirmed many of Digital's existing claims but, as Digital has interpreted the evidence, reveals that Utility expressly targeted Digital for commercial destruction out of a desire to force Digital into liquidation and thereby to acquire Digital's assets. According to her testimony, the Boykin '556 Patent, the validity of which was questioned by Utility's own officers, has been used to threaten Digital's customers with suits for patent infringement for the express purpose of suppressing Digital's sales and revenues and thereby hastening Digital's demise. The hearing has been continued until April 21, 2015 in order to take additional evidence. 

Based upon the facts revealed at the March 4, 2015 hearing, on Monday, March 16, 2015, Digital's attorneys sought leave to amend its Complaint in the Kansas suit to assert additional claims against Utility. Those new claims include claims of actual or attempted monopolization, in violation of § 2 of the Sherman Act, claims arising under a new Georgia statute that prohibits threats of patent infringement in "bad faith", and additional claims of unfair competition/false advertising in violation of § 63(a) of the Lanham Act. As these statutes expressly provide, Digital will seek treble damages, punitive damages and attorneys' fees as well as injunctive relief.

"We believe these attacks upon our products by Utility Associates are the result of the dominance of our legacy in-car video products and the excitement and impressive traction that our new products, such as the DVM-800, FirstVU and VULink, are gaining in the marketplace," stated Stanton E. Ross, Chief Executive Officer of Digital Ally, Inc. "We have been attempting to engage Utility in court and under oath for some time, so that we can shed light upon Utility's motives and the false statements underlying its egregious marketing campaign, which we believe was designed to create fear and otherwise deter customers from purchasing our products. The initial hearing in court has substantiated our suspicions about Utility, and we look forward to further hearings and the ultimate outcome of the USPTO examination and our litigation underway in the Federal District Court of Kansas."

"We will continue to fully support our customers' right to purchase and utilize our products," continued Ross. "Our customers can be assured that Digital Ally will defend and indemnify them against any and all threats of infringement alleged by Utility Associates in its letters and any related lawsuit."

About Digital Ally, Inc.

Digital Ally, Inc. develops, manufactures and markets advanced technology products for law enforcement, homeland security and commercial applications. The Company's primary focus is digital video imaging and storage. For additional information, visit www.digitalallyinc.com.

The Company is headquartered in Lenexa, Kansas, and its shares are traded on The NASDAQ Capital Market under the symbol "DGLY".

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Act of 1934. These forward-looking statements are based largely on the expectations or forecasts of future events, can be affected by inaccurate assumptions, and are subject to various business risks and known and unknown uncertainties, a number of which are beyond the control of management. Therefore, actual results could differ materially from the forward-looking statements contained in this press release. A wide variety of factors that may cause actual results to differ from the forward-looking statements include, but are not limited to, the following: whether the legal actions that the Company is taking relative to Utility Associates will achieve its intended objectives; whether the USPTO will ultimately invalidate Utility's '556 patent; whether the interest shown in the Company's newer products will translate into sales of such products; the Company's ability to maintain or expand its share of the markets in which it competes, including those outside the law enforcement industry; whether there will be a commercial market, domestically and internationally, for one or more of its new products, including the FirstVU HD, DVM-800 and VuLink; whether the federal economic stimulus funding for law enforcement agencies will have a positive impact on the Company's revenue; whether the Company will be able to adapt its technology to new and different uses, including being able to introduce new products; whether and the extent to which the new patents allowed by the US Patent Office will give the Company effective, enforceable protection of the intellectual property contained in its products in the marketplace; whether the Company will achieve positive outcomes in its litigation with various parties, including Utility Associates; competition from larger, more established companies with far greater economic and human resources; its ability to attract and retain customers and quality employees; the effect of changing economic conditions; and changes in government regulations, tax rates and similar matters. These cautionary statements should not be construed as exhaustive or as any admission as to the adequacy of the Company's disclosures. The Company cannot predict or determine after the fact what factors would cause actual results to differ materially from those indicated by the forward-looking statements or other statements. The reader should consider statements that include the words "believes", "expects", "anticipates", "intends", "estimates", "plans", "projects", "should", or other expressions that are predictions of or indicate future events or trends, to be uncertain and forward-looking. The Company does not undertake to publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise. Additional information respecting factors that could materially affect the Company and its operations are contained in its annual report on Form 10-K for the year ended December 31, 2013, and its Form 10-Q for the nine months ended September 30, 2014, as filed with the Securities and Exchange Commission. 

Contact Information

  • For Additional Information, Please Contact:

    Stanton E. Ross
    CEO
    (913) 814-7774
    or
    RJ Falkner & Company, Inc.
    Investor Relations Counsel
    (800) 377-9893
    info@rjfalkner.com