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Axon/Digital Ally Litigation Update

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While we are disappointed that the patent office has denied institution of Axon’s petition for inter partes review (IPR) on some claims of one of Digital Ally’s two patents-in-suit (No. 9,253,452), this process is far from over. Two IPRs were filed against the 452 patent and there is still another IPR that is pending.  Moreover, Digital is simply wrong that this USPTO decision ends the validity challenge to the ‘452 patent  There are many more hurdles for Digital to overcome as outlined below before any issue of damages could even be considered. 

This recent development in Axon’s ongoing litigation with Digital Ally needs to be put in context with our overall litigation strategy.  We have a multitier approach and have been successful in the execution of this strategy as follows:

  • In Q4 2016, Axon filed 2 inter partes review petitions (IPRs) with the US Patent and Trademark Office (USPTO) challenging the validity of Digital patent No. 8,781,292.
  • In Q1 2017, Axon filed 2 IPRs with the US Patent and Trademark Office (USPTO) challenging the validity of Digital patent No. No. 9,253,452.
  • In January 2017, the federal district court in Kansas dismissed ALL of Digital’s antitrust claims (Case No. CV-16-02032-CM-JPO).
  • In March 2017, the court stayed the litigation pending patent office decisions on Axon’s IPR petitions.
  • On June 6, 2017, the USPTO rejected one of the IPRs that Axon filed against the ‘292 patent 8,781,292 but granted the second IPR and invalidity proceedings have been instituted against that patent regarding its auto-activation camera technology on ALL asserted claims.  The IPR process is working to potentially eliminate the ‘292 patent altogether and to force Digital to take positions on key claim construction terms.

In addition to challenging the validity of Digital’s patents in the USPTO, Axon has litigation claims pending in Federal District Court to invalidate both of Digital’s patents where the rules of evidence are broader than the USPTO IPR proceedings.  The IPR process only allows submission of limited information (printed prior art/publications).  Axon has additional material that couldn’t be submitted in the IPR proceedings, and that hasn't been considered by the Patent Office, supporting the invalidity of both the '452 and '292 patents.  

Axon also has claims pending in District Court against Digital for inequitable conduct before the USPTO which could invalidate both patents.  The IPR was instituted on the '292 on all asserted claims and that patent has the same disclosures as '452 patent. The IPR institution was on the same prior art that Digital withheld from the Patent Office, as described in our inequitable conduct counterclaims. 

In addition to the above offensive legal strategy, our best defense is non-infringement.  Digital not only has to defend itself against each of the above claims Axon has filed against them, but they have a very difficult burden to prove infringement given that Axon’s Signal technology does not infringe Digital’s patents. 

The denial of the present IPR petition does not mean that the stay in district court litigation will be lifted.  All of the reasons for initially granting the litigation stay remain firmly in place.  The IPR on the ‘292 patent will proceed in the patent office with the potential to significantly narrow the issues and claims for trial since the two patents are related, share the same specification, and have claim terms in common.

Digital is flat out wrong to suggest Axon’s '452 arguments in the district court litigation are now limited to non-infringement and damages.  They are also wrong to suggest that this USPTO decision ends the validity challenge to the ‘452 patent.  There are many more hurdles for Digital to overcome in both the USPTO and District Court before any issue of damages could even be considered.  This is not the first time Digital has prematurely celebrated. 

In addition, Digital’s press release fails to mention that all claims of the ‘292 patent at issue in the litigation are viewed by the Patent Office as having “a reasonable likelihood of prevailing in the contention that these claims are unpatentable.” Digital’s press release also contains the following inaccuracies: 

  • It states Claims 7-10 and 20 were the subject of the IPR when, in fact, Claims 10-17 and 20 were the subject of this IPR.
  • It states Axon has “severely limited” litigation defenses, which is untrue.  Axon has all defenses available, including all defenses based on prior art.

Axon remains confident in our invalidity and noninfringement positions and our ultimate success in this litigation.

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