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Digital Ally Wins Significant Victory at U.S. Patent Office With Denial of Axon–s Request to Invalidate Its –452 Patent

LENEXA, KS — (Marketwired) — 07/07/17 — Digital Ally, Inc. (NASDAQ: DGLY) (“Digital” or the “Company”), which develops, manufactures and markets advanced video surveillance products for law enforcement, homeland security and commercial applications, today announces a significant victory in its legal battles against Axon Enterprise, Inc. (“Axon,” formerly known as TASER International, Inc.).

On July 6, 2017, the U.S. Patent Office (the “Patent Office”) denied Axon–s petition for inter partes review (“IPR”) of Digital–s Patent No. 9,253,452 (the “–452 Patent”). The Patent Office rejected every single ground of invalidity that Axon put forward challenging claims 7-10 and 20. These are the exact claims at issue in Digital–s litigation against Axon. The Patent Office further found that “…the information presented [by Axon] in the Petition does not establish a reasonable likelihood that [Axon] would prevail in showing the unpatentability of any of the challenged claims on the grounds set forth in the Petition.”

The –452 Patent generally covers the automatic activation and coordination of multiple recording devices in response to a triggering event such as a law enforcement officer activating the light bar on the vehicle. This pioneering invention eliminates the burden of manually activating multiple recording devices when law enforcement officers are responding to an emergent situation. This invention will help to guarantee that all relevant evidence is captured, even if an officer forgets to activate his cameras.

The Patent Office–s decision yet again confirms the strength and validity of Digital–s patents, as well as the inadequacy of Axon–s invalidity arguments. With this loss, the Company believes that the practical availability of Axon–s litigation defenses is now severely limited, principally leaving infringement and damages to be resolved. Additionally, because Axon waited until nearly the expiration of its one-year time limit within which to file the most recent IPRs, Axon is now barred from filing any further IPRs against the –452 Patent, as well as against Digital–s Patent No. 8,781,292 (the “–292 Patent”).

“We are extremely pleased with the Patent Office–s decision to confirm the validity of our –452 Patent,” said Digital–s CEO, Stanton E. Ross. “It is unfortunate that Axon continues to raise these baseless validity arguments to avoid a clear case of willful infringement. We remain committed to defeating Axon–s arguments and ultimately winning this lawsuit. We look forward to restarting our patent infringement litigation in U.S. District Court against Axon, which had been stayed pending the Patent Office IPRs. We will now take the necessary actions to move to a trial where a jury can finally end Axon–s willful infringement and assess damages due to us.”

The Company plans to conduct a conference call on Monday, July 10, 2017. Time and dial-in information will be circulated later today.

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. The Company is headquartered in Lenexa, Kansas, and its shares are traded on The Nasdaq Capital Market under the symbol “DGLY.” For additional news and information please visit or follow us on Twitter @digitalallyinc and Facebook .

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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: the ultimate outcome of the patent infringement litigation between the Company and Axon; whether Axon will seek to have the Patent Office reconsider its IPR decision and whether the Patent Office will do so; competition from larger, more established companies with far greater economic and human resources; the effect of changing economic conditions; and changes in government regulations 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, 2016 and Form 10-Q for the three months ended March 30, 2017, as filed with the Securities and Exchange Commission.

Stanton E. Ross
CEO
(913) 814-7774

Thomas J. Heckman
CFO
(913) 814-7774