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

Digital Ally, Inc. 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."