Digital Ally Obtains Key Admission From Utility Associates in Patent Litigation

LENEXA, KS--(Marketwired - Apr 21, 2014) - Digital Ally, Inc. (NASDAQ: DGLY) ("the Company"), a leading provider of mobile digital surveillance systems for law enforcement, security, and commercial applications, today announced the following developments in its litigation against Utility Associates, Inc. ("Utility").

Digital Ally initiated litigation against Utility in the United States District Court for the District of Kansas in October 2013. The lawsuit sought a declaration that the Company's mobile video surveillance system did not infringe any claim of Utility's '556 Patent. In so doing, Digital sought to protect itself and its current and prospective customers from Utility's campaign of sending letters threatening that the use of such systems purchased from third parties not licensed to the '556 Patent would create liability for patent infringement. In those letters, Utility makes baseless threats of possible infringement upon a purported "patent" of questionable validity that has never been enforced and that Utility only recently purchased. 

The District Court has dismissed Digital's lawsuit because it decided that Kansas was not the proper jurisdictional forum for the dispute. The Court's decision was not a ruling on the merits of the threats made by Utility regarding its patent. Nothing in its ruling addressed the issue whether Utility's threats were proper or justified. 

In the course of the proceedings Utility made a key admission to the District Court: namely, that it has not accused Digital Ally of any patent infringement.

Digital Ally's Chief Executive Officer, Stanton E. Ross, stated, "We are disappointed in the Judge's ruling and in Utility's attempts to avoid the substance of our claims by opposing the lawsuit on a purely jurisdictional basis rather than on the merits. It is clear to us that Utility wants to avoid answering for its misconduct in front of a Kansas jury." 

Digital Ally has already filed a notice of appeal on the issue of whether this dispute can be heard in Kansas and plans to continue its legal proceedings against Utility to protect its customers, products, and reputation. Such proceedings will include filing an appropriate action with the U.S. Patent and Trademark Office to invalidate the '556 Patent in the near future.

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 Utility Associates, Inc. will achieve their intended objectives, including its filing an appropriate action at the U.S. Patent and Trademark Office to invalidate the '556 Patent; whether the actions taken by Utility Associates, Inc. will have a negative impact on the business of the Company; 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, as filed with the Securities and Exchange Commission.