United States Patent Office Questions Validity of Utility Associates' Boykin '556 Patent and Institutes Inter Partes Review

LENEXA, KS--(Marketwired - Oct 3, 2014) - Digital Ally, Inc. (NASDAQ: DGLY) ("the Company"), which develops, manufactures and markets advanced video surveillance products for law enforcement, homeland security and commercial applications, today announced that it has been informed that the United States Patent Office has granted its request to examine the validity of certain claims of United States Patent No. 6,831,556 that was issued to Boykin (the "556 patent"), which is owned by Utility Associates, Inc. ("Utility"). 

The Company has been in litigation with Utility for the past year after Utility began targeting our customers and prospective customers with its marketing campaign. This campaign consisted largely of sending threatening letters to our customers designed to create fear and otherwise deter them from purchasing our products. The Company immediately took action to protect its customers and has filed two lawsuits in the United States District Court for the District of Kansas challenging Utility's actions. These lawsuits include claims by the Company that Utility has defamed the Company, illegally interfered with its contracts, customer relationships and business expectancies, and violated non-competition and confidentiality agreements by hiring former employees. Additionally, the Company believes that the '556 patent Utility was using to threaten its customers should never have issued and has initiated an action with the United States Patent Office to invalidate Utility's patent.

The Company has just received notice that the United States Patent Office has granted its request to examine the validity of certain claims of Utility's '556 patent. In its decision, the Patent Trial and Appeal Board declared that "we are persuaded, on this record, that [Digital Ally] demonstrates a reasonable likelihood of prevailing in showing the unpatentability of claims 1-7 and 9-25 of the '556 patent." Utility must now appear before the Board and defend the validity of its patent. Given the strength of Digital Ally's positions, it is confident that the Patent Office will ultimately determine these claims to be invalid.

"We believe these attacks upon our products by Utility are the result of the success 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. "The DVM-800, in particular, is attracting the attention and interest of many domestic and international law enforcement agencies. We look forward to pressing onward with our actions against Utility in light of this favorable decision by the United States Patent Office in order to protect our customers and our Company from these false and misleading threat letters being disseminated by Utility."

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; whether United States Patent Office will ultimately invalidate Utility's '556 patent; whether the interest shown in the Company's newer products will translate into sales of such products; whether the FirstVU HD, VuLink and DVM-800 will continue to gain traction in the marketplace and generate an increasing portion of its total sales; whether the Company can obtain its components and products on a timely basis; its ability to maintain or expand its share of the markets in which it competes, including those outside the law enforcement industry; 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 quarterly report on Form 10-Q for the three and six months ended June 30, 2014, as filed with the Securities and Exchange Commission.