The US Patent and Trademark Office upheld Digital Ally Inc.’s (NASDAQ:DGLY) intellectual property in the most recent challenges to the Lenexa, Kansas, company's patents by its competitor, taser-maker Axon Enterprise Inc. (NASDAQ:AAXN).
According to the Kansas City Business Journal, in 2016, Digital Ally was awarded patents “for its VuLink system, which automatically activates police body cameras or in-car cameras” with a “trigger like emergency lights.” Axon which also sells police cameras, has filed multiple challenges with the U.S. Patent and Trademark Office to mount a challenge against Digital Ally.
Patent Office dismisses last of five legal challenges
Last week, the Patent Office dismissed the last of five legal challenges filed against Digital Ally and upheld its patent.
During this protracted legal tussle, Axon has been trying to demonstrate that Digital Ally’s patent claims are “unpatentable.” Axon claims it has “improved upon the old technology described in the Digital Ally patent” with new patent-pending technology called Axon Signal, which is a communication platform that allows auto-activation of Axon cameras by activation of conducted electrical weapons or a squad car's light bar.
However, in a written decision, the Patent office reaffirmed the validity of Digital Ally's patents and said Axon had "not demonstrated by a preponderance of the evidence that the challenged claims are unpatentable."
"We sincerely hope that this latest win validating our patented technology shows the industry that Digital is the true inventor of auto-activation, not Axon," said Digital Ally CEO Stanton Ross.
"Cities and police departments across the country should now understand that we are the rightful inventors and owners of this technology," he added. "Instead, Axon has built its body camera business on the back of our technology hoping to cover itself by having the patents invalidated," he continued.
The CEO said that to “justify its actions,” Axon had spent “massive amounts of money and time” trying to invalidate Digital Ally’s patents.
“Not a single one of these efforts has been successful. We remain hopeful that the Patent Office's wholesale rejection of Axon's arguments will help it come to grips with its weakened position,” said Ross.
“If not, we remain committed to having a jury decide this dispute. We are excited for the court to begin to move both cases towards trial where a jury can finally end Axon's and WatchGuard's infringement and assess damages due to Digital Ally," he added.
Digital Ally also filed a lawsuit against WatchGuard for patent infringement in 2016 on three different patents. WatchGuard joined Axon in this attempt to invalidate Digital Ally’s ‘292 Patent.
Digital Ally’s shares closed flat at US$2.50 Tuesday on a broad market pullback.