There's some shady stuff going down at a company that's supposed to protect America's cops
The company is being sued for anti-competitive behavior and patent infringement in part of what has become one of the fiercest fights in American business - the fight over who will outfit the hopefully more transparent, less lethal future of American policing.
This fight was intensified after the death of 18 year-old Michael Brown at the hands of police in Ferguson, Missouri. Following that incident, President Barack Obama proposed providing police departments across the country with $75 million to buy body cameras over the next three years.
In its suit against Taser, Digital Ally, a Kansas-based body camera maker, alleges that Taser not only copied its camera design to make its successful AXON line of body cameras, but has also paid off current and former law enforcement and government officials in order to win contracts and box Digital Ally out of the market.
"Taser's own statements, press releases and website make clear that it used Digital Ally's pioneering patented technology for its Axon Signal product," says the complaint, which was filed in February. "For example, Taser recently admitted that its system 'built upon the old technology described in the Digital Ally patent...' Taser is now using Digital Ally's patented technology to unfairly and improperly compete against Digital Ally in the marketplace."
The cameras
The technology Digital Ally is talking about is called The VuLink. It solved the problem of police officers having to manually turn on multiple recording devices while in the field, and created a "fully integrated event capturing-ecosystem for officer's multiple recording devices," according to the complaint.
As for the Axon line of cameras, there's no question its made a difference for Taser. It generated $13 million of the company's $104 million in revenue in the first 6 months of this year. The year before it generated $10 million of the company's $86 million in revenue.
The market has noticed Axon's impact. Last year, after the City of London Police Department ordered 178 AXON body-worn video cameras in the first quarter, the stock jumped 8%. Taser uses AXON cameras to feed its other business - video and audio evidence management - by subsidizing cameras if clients agree to use its evidence suite as well.
Taser has yet to respond to Business Insider's request for comment on this matter.
The camera users
But again that's only one aspect of this case. What's more chilling than patent infringement are Digital Ally's allegations that Taser has been buying the support of law enforcement and political officials across the country, specifically in Albuquerque, New Mexico; Fort Worth, Texas; Los Angeles, California; Memphis, Tennessee; New Orleans, Louisiana; San Francisco, California; San Diego, California; Spokane, Washington; Salt Lake City, Utah; and Wichita, Kansas.
According to Digital Ally's complaint and multiple reports, one of the more common ways Taser does this is by hiring retired officers as consultants, paying them speaking fees and taking care of their travel bills.
The Associated Press has been all over this. After reviewing Fort Worth Police Department emails released under Texas' open records law, it reported that after Taser pressured Fort Worth's then-police chief to push through a contract before its quarterly earnings report, the chief quipped "Someone should give me a raise."
The same chief said that he could persuade the police department in San Antonio, Texas to buy products from Taser as well "but my fee is not cheap! LOL," he wrote in e-mails obtained by the AP.
In Salt Lake City, the police department bypassed the city council in order to purchase 295 body cameras and part of its evidence storing suit, Evidence.com. The city's police chief, Chris Burbank is paid to travel to speak on Taser's behalf at company sponsored conferences and events. He has also recorded an Evidence.com promotional video.
Albuquerque's city council demanded an investigation after its police chief, Ray Shultz, became a Taser consultant after stepping down. He had supported a $1.9 million contract for Taser cameras.
For its part, Digital Ally says that it and other competitors were promised a chance to compete for the Wichita's police department contract back in 2014. It never happened. The department never tested Digital Ally's cameras, or anyone else's, according to the lawsuit, and Taser was given the contract.
"By its act and conduct, Taser has contracted, combined or conspired with procurement officials or their agents in Wichita, Kansas to sell its products to the City of Wichita, Kansas without opportunities for competing bids, without competitive testing, and with the intended effect and for the purpose of excluding competition, whether by Digital or by other suppliers of body cameras," says the complaint.
It's clear the judge in this case believes there's more to be said about all that. Earlier this month, Digital Ally was granted permission to proceed with discovery in the case.
So we'll know more about this soon enough.