Digital Ally, Inc. (NASDAQ:DGLY)
Shares of Digital Ally, Inc. (NASDAQ:DGLY) are up 18% after the company won a court ruling which should send the issue to trial. The market reacted favorably to the decision by the Federal District Court of Kansas after it rejected the request of Axon Enterprise, Inc. (Axon) to maintain the stay of the patent lawsuit brought against it by Digital Ally.
Digital Ally, headquartered in Lenexa, KS, specializes in the design and manufacturing of the highest quality video recording equipment and video analytic software. Its products are distributed globally. The company’s products include in-car and body cameras, cloud and local management software, and automatic recording technology. The products have been designed to work seamlessly together.
On November 8, 2017, the company’s Board of Directors decided to explore strategic alternatives. Avenues may include monetizing its patent portfolio and related patent infringement litigation against Axon, the sale of Digital Ally as a whole, or the sale of select properties or groups of properties or individual businesses. The result of the strategic review may also include the continued implementation of the company’s business plan. The Company has retained Roth Capital Partners LLC to assist in this process.
Digital Ally Accused of Patent Infringement
The litigation between Digital Ally, Inc. (NASDAQ:DGLY) and Axon involves two patents — the ‘452 Patent and U.S. Patent No. 8,781,292 (“the ‘292 Patent”). 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. Within the Axon product family, the “Signal” component is responsible for this functionality. The ‘292 Patent is asserted against Axon’s Signal Performance Power Magazine (SPPM) – a battery pack that incorporates Signal and is designed to activate one or more body cameras when the safety of a conducted electrical weapon is deactivated.
On July 6, 2017, the U.S. Patent Office denied Axon’s petition for inter partes review of Digital’s ‘452 Patent. On August 3, 2017, the Patent Office denied Axon’s final petition for IPR of the ‘452 Patent. This was Axon’s final attempt to invalidate the ‘452 Patent before the Patent Office.
Last Friday, November 17, 2017, the Court rejected Axon’s request and lifted the stay of the litigation. In ruling on the motion regarding the stay, the Court found that the evidence submitted by Digital Ally, Inc. (NASDAQ:DGLY) “weigh heavily against continuing the stay of the ‘452 patent” and that “the Court denies Defendant’s [Axon’s] request to continue the stay of this case with respect to the ‘452 patent.” The Court has set a hearing for December 14, 2017, to discuss a schedule for moving the case forward to trial.
DGLY Stock Performance
Digital Ally, Inc. (NASDAQ:DGLY) has a market capitalization of $16.1 million and a float of just 5.73 million shares. This makes it a frequent subject of day-trading chat rooms and frequent jumps in trading volume.
Year-to-date, DGLY stock has lost over 44% but is up 4.5% for the past week. It has a consensus, one-year target price of $6 – a price which was established early in 2017 and is also its 52-week high. Since then, the stock has largely slid downwards to $1.70, its 52-week low which was hit earlier this month.
Three investment firms cover Digital Ally, Inc. (NASDAQ:DGLY). Two rate DGLY stock as a “strong Buy”, while one rates the shares as a “Hold”.
I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.
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About the author: Marc has a degree in economics and a MSc. in Finance. Over his 20-year career, Marc has worked for global investment firms in Europe and the United States as an analyst, fund manager, and consultant.