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TMCNet:  Utility Announces Digital Ally's Lawsuit Demanding a Declaratory Judgment of Patent Non-Infringement Has Been Dismissed by the US District Court

[April 15, 2014]

Utility Announces Digital Ally's Lawsuit Demanding a Declaratory Judgment of Patent Non-Infringement Has Been Dismissed by the US District Court

TUCKER, Ga. --(Business Wire)--

Utility, the makers of Rocket Vehicle Routers, Atlas video recorder systems, and other popular Situational Awareness technologies for mobile resource management, announces a Declaratory Judgment lawsuit filed by Digital Ally (DGLY) in October 2013 has been dismissed by Sam A. Crow, U.S. District Senior Judge of Topeka, Kansas.

Utility President Ted Davis stated, "I was very surprised when I read Digital Ally's lawsuit filing, which included the following statement:"

Digital Ally has invested substantial resources into manufacturing and promoting the current technology resident in its advanced digital video systems. Such resources could have been dedicated to re-designing, as necessary, around the technology claimed in the '556 patent.

"Digital Ally then further stated:"

Digital Ally reasonably believed that the '556 Patent would not be asserted against its products and continued to manufacture and promote these products through its nationwide sales and distribution channels.

Davis further stated, "Since patents are presumed to be valid, we would have thought that Digital Ally would have wanted to determine if they were infringing on a patent. To me, Digital Ally seems to have this backward. Rather than the patent owner trying to run down every possible infringer, I would think that a manufacturer would want to take steps to avoid infringement or obtain a valid license to a patent. In any event, I was pleased by the Court's decision."

"We are pleased that Judge Crow has dismissed the Digital Ally lawsuit seeking a Declaratory Judgment that Digital Ally products do not infringe on our Boykin '556 patent," stated Robert McKeeman, Chairman and CEO of Utility. "This lawsuit filed by Digital Ally in October 2013 was always puzzling to us. Digital Ally never contacted us before filing their lawsuit to discuss their issues and concerns. We only learned of the lawsuit by reading a Digital Ally October 28, 2013 press release. In that press release, Digital Ally stated that 'Digital Ally will be taking steps to invalidate the '556 patent through appropriate procedures at the United States Patent and Trademark Office'. However, as late as yesterday, we have not been notified by the US Patent Office of any US Patent Office challenge to our Boykin '556 patent submitted by Digital Ally or by any other party. Patents are presumed to be valid when issued, but we agree there is a process to challenge issued patents. We understand that challenging the claims of a patent can be an uphill battle and very expensive. We are confident the US Patent Office did a very thorough patentability analysis between the original patent application filing in 2001 and awarding the Boykin '556 patent in 2004. We continue to believe that the patent is valid. Furthermore, a reputable Fortune 500 manufacturer and marketer of legal evidence video camera systems in 2009 paid a seven-figure sum to purchase a license to the Boykin '556 patent. We believe that shows others believe the patent is valid too."

The Judge's Order dismissing the Digital Ally lawsuit inluded the following paragraph:

Since March of 2006 Plaintiff has been selling products which use technology similar to that used in Defendant's products covered by the '556 Patent. When the '556 Patent was owned by Defendant's predecessor-in-interest, Plaintiff met with that owner to discuss Plaintiff's technology and possible joint ventures and/or acquisitions. Based on that predecessor's knowledge of Plaintiff's technology and its silence regarding any infringement, Plaintiff believed that the '556 Patent would not be asserted against its products so continued to manufacture and promote them through its nationwide sales and distribution channels.

"So obviously Digital Ally knew about the Boykin '556 patent long before the Boykin '556 patent was acquired by Utility," stated McKeeman. "Perhaps Digital Ally could have purchased the Boykin '556 patent before we purchased it for a considerable sum, but they did not. Instead, Digital Ally sued our company. It is important to note that we did not counter-sue. Many factors go into such a determination. Consideration of investing legal fees and management time in a lawsuit always has to be balanced with the likelihood of actually collecting damages if the lawsuit is successful."

"We believe in providing compelling value to our customers now and in the future," stated McKeeman. "We had our best 4th quarter ever in 2013, while Digital Ally in their 2013 Earnings Conference Call held on March 27, 2014 stated they had their worst 4th quarter in years. Our company is privately held and does not publicly release financial data. However, based upon public information from published DGLY SEC (News - Alert) filings for sales and employee count, I can report that our sales appear to be significantly higher than Digital Ally's sales in the 4th quarter of 2013. And on a per employee basis in the 4th quarter 2013, Utility sales per employee also appear to be significantly higher than Digital Ally's sales per employee. Yet further, it is public record from SEC filings that Digital Ally had an operating loss of $1,573,958 in 4th quarter 2013, and a Balance Sheet 'Cash and Cash Equivalent' account balance of $454,978 on December 31, 2013. So we were concerned that collecting on a judgment resulting from a potential successful counter-suit might be in question. Instead of filing lawsuits, we are focused on providing reliable mission-critical vehicle communications and legal evidence capture and distribution software as a service, vehicle video recording and wireless router hardware, and patented Intellectual Property solutions that our customers can rely on for the long term."

McKeeman further stated, "In Digital Ally's 2013 Earnings Conference Call held on March 27, 2014, Digital Ally CEO Stan Ross referred to our company as a 'Patent Troll'. This was surprising to us, because our company manufactures, sells, and supports a legal evidence video recorder solution covered by the claims included in the Boykin '556 patent. The term 'Patent Troll' commonly refers to an entity that owns a patent but does not actively make, import, or sell a product covered by the claims in the patent, and instead seeks to collect revenue by selling licenses to the patent. We have not offered to sell a Boykin '556 patent license to Digital Ally, so we don't understand why Mr. Ross would refer to our company as a 'Patent Troll'. We definitely are not a 'Patent Troll'. In fact, only one license to the Boykin '556 patent has ever been sold."

Executives at Utility extend gratitude to existing and future customers. Added Davis, "We are extremely proud of our products and recognize that the word is getting out far and wide about them. We appreciate our long-standing customers and all of the new organizations working with us as we work to ensure that the video management software as a service and hardware we sell are among the best in the business, and include a license to the Boykin '556 patent."

For more information about this and other products offered by Utility, contact the company via www.utility.com.

About Utility, Inc.

Utility, Inc. develops, manufactures and supports video recorder systems, web browser-based video management software as a service, vehicle routers and an RCM / AVaiL / Vehicle Diagnostics / RFID tag (News - Alert) software as a service that allows First Responders, Transit Agencies, and Utilities to effectively command, control and support mission critical field operations, and reliably record and transmit video, audio, and metadata legal evidence. Utility delivers real-time information about virtually any mobile asset, providing a unified operating picture for safe, effective, and efficient mobile field operations. Utility's Video Recording Systems and Rocket Vehicle Routers are engineered, designed, assembled, configured, and tested in Tucker, Georgia, USA. Utility also owns the Silvernail '548 patent for Video Recording in Public Transit vehicles, and has Patents pending for automatic switching between the best available 3G and 4G cellular communications, Ultrafast Video Upload Access Point (News - Alert) with automatic load balancing across multiple access points, and other situational awareness Intellectual Property. The Remote Configuration Management, AVaiL and DataSync software as a service are developed and supported at the company headquarters in metro Atlanta, Georgia, USA and is hosted at secure data centers in metro Atlanta and Wisconsin USA. Utility is venture capital-backed by Braemar Energy Ventures. For more information, visit www.utility.com.


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