Case Document 7-1 Filed 05/30/14 Page 1 of 6 Jane W. Duke, Ark. Bar No. 96190 Christopher D. Plumlee, Ark. Bar No. 96154 MITCHELL, WILLIAMS, SELIG, GATES WOODYARD, P.L.L.C. 425 West Capitol Avenue, Suite 1800 Little Rock, Arkansas 72201 Telephone: (501) 688-8842 Facsimile: (501) 9183842 Email: jduke@mwlaw.com Michael A. Carvin {pro hac admission pending) Ryan J. Watson (pro hac admission pending) JONES DAY 51 Louisiana Avenue, NW. Washington, D.C. 20001 Telephone: (202) 879-3939 Facsimile: (202) 626-1700 Email: macawin@jonesday.com rwatson@jonesday.com Attorneys for Piainii?s FILED DIS TRIC EASTERN DISTRIOTTATELIELSAS MAY 30 2014 W. MCCORMACK, CLERK DEP CLERK UNITED STATES DISTRICT COURT EASTERN DISTRICT OF ARKANSAS WESTERN DIVISION DIGITAL RECOGNITION NETWORK, VIGILANT SOLUTIONS, INC, Plaintiffs, v. MIKE BEEBE, in his o?icial capacity as Governor of the State of A rkansas; DUSTIN in his o?iciai capacity as Attorney General ofihe State of Arkansas, Defendants. DECLARATION OF TODD HODNETT Civil No. 141 l4 an ?33} Signal DECLARATION OF TODD HODNETT Todd Hodnett, pursuant to 28 U.S.C. 1746, declares as follows under penalty of perjury: 1. My name is Todd Hodnett. I have personal knowledge of the facts set forth herein, and 1 am otherwise competent to testify. Case Document 7-1 Filed 05/30/14 Page United States citizen, and I reside at 57% Forest Highlands, Fort Worth, TX 76132. 3. I am the Founder and Chairman of the Board of Directors of Plaintiff Digital Recognition Network, Inc. 4. DRN is a Delaware corporation with its principal of?ce located at 4150 International Plaza, Suite 800, Fort Worth, TX 7'6109. 5. DRN uses photographs and image-content analysis techniques to serve the ?nancial services, insurance, and vehicle repossession industries. Because DRN and others use such techniques in an effort to locate speci?c content within a photograph?namely, the alphanumeric content printed on a license plate?the application of this technology that is at issue here is sometimes referred to as ?automatic license plate reader? technology. 6. DRN sells ALPR camera kits to its ?camera af?liates,? which are typically repossession companies. The camera affiliates place ALPR systems on tow trucks or other vehicles. ALPR systems then take photographs that include nearby vehicles? license plates. 7. When camera af?liates collect license-plate data using ALPR systems, DRN then disseminates the resulting license-plate data to its clients and partners, which use the data for purposes such as identifying cars that should be repossessed and locating cars that have been stolen or fraudulently reported as stolen. For example, DRN earns substantial revenue by selling license-plate data to automobile lenders and insurance companies. 3. DRN also has a partnership with Plaintiff Vigilant Solutions, Inc's (?Vigilant?) National Vehicle Location Service, through which ALPR data is made available to law enforcement agencies?usually at no cost to the agencies. Speci?cally, DRN provides captured Case Document 7-1 Filed 05/30/14 Page 3 of 6 license-plate data to Vigilant, which then shares the data with law enforcement agencies for purposes that range from utilizing near real-time alerts for locating missing persons and stolen vehicles to the use of historical license-plate data to solve crimes. 9. Before the Arkansas Automatic License Plate Reader System Act (?the Act?)1 took effect, DRN had sold a total of three ALPR camera kits to three companies operating in Arkansas. Speci?cally, Arkansas Repossessors, Absolute Towing, and Recovery Remarketing each purchased one kit for the price of $15,825. 10. Prior to the Act?s effective date, Arkansas Repossessors and Absolute Towing had begun operating camera kits in Arkansas. Prior to the effective date of the Act, DRN was collecting ALPR data in Arkansas and disseminating the data to its clients and partners?including NCMEC, NICE, and Vigilant, which was then sharing the data with law enforcement agencies. 12. Prior to the effective date of the Act, DRN sold license-plate data collected by ALPR systems in Arkansas to clients such as automobile lenders and insurance companies, thus generating revenue for DRN. 13. The Act?s prohibition on the ?use? of an ALPR system precludes DRN from disseminating or disclosing license-plate data that is captured by an ALPR system and from using ALPR systems to collect license-plate data. See Ark. Code 14. As a result of the Act, DRN's Arkansas camera af?liates have stopped using their ALPR systems, which are the source of license-plate data. Moreover, because of the Act, DRN can no longer disseminate or sell license-plate data collected by ALPR systems in Arkansas. Additionally, the Act precludes DRN from selling additional camera kits in Arkansas 2013 Ark. Acts 1491 (codi?ed at Ark. Code 12-12-1801 et seq). 3 Case Document 7-1 Filed 05/30/14 Page 4 of 6 to camera af?liates such as repossession companies. Because of the Act, DRN also refunded the payments that one of its Arkansas camera af?liates had made for a camera kit. The Act also prohibits DRN from disseminating Arkansas-based license-plate data to Vigilant. In short, operations in Arkansas have ceased. 15. But for the Act, DRN and its af?liates would resume their collection and dissemination of captured license-plate data using ALPR systems within Arkansas. But for the Act, DRN and its camera af?liates would collect license?plate data using ALPR systems in Arkansas, and DRN would then generate revenue by selling this data to clients such as automobile lenders and insurance companies. In addition, were it not for the Act, DRN would seek to sell additional camera kits in Arkansas, thus generating further revenue. Finally, but for the Act, DRN would disseminate Arkansas-based ALPR data to Vigilant. 16. I declare under penalty of pelj ury that the foregoing is true and correct. as Executed on this day of May, 2014. City State Todd Hodii?tt Case Document 7-1 Filed 05/30/14 Page 5 of 6 CERTIFICATE OF SERVICE I hereby certify that on May 30, 2014, a true and correct copy of the foregoing will be served on the following party via hand delivery, consistent with both Fed. R. Civ. P. and 40 Mike Beebe, Governor of the State of Arkansas State Capitol Room 250 Little Rock, AR 72201 In addition, I hereby certify that on May 30, 2014, a true and correct copy of the foregoing was served on the following party via certi?ed mail at the following address: Mike Beebe, Governor of the State of Arkansas State Capitol Room 250 Little Rock, AR 7220] In addition, I hereby certify that on May 30, 2014, a true and cerrect copy of the foregoing will be served on the following party via hand delivery, consistent with Fed. R. Civ. P. at the following address: Dustin McDaniel, Attorney General of the State of Arkansas Attorney General?s Of?ce 323 Center Street, Suite 200 Little Rock, AR 72201 In addition, I hereby certify that on May 30, 2014, a true and correct copy of the foregoing was served on the following party via certi?ed mail, consistent with Fed. R. Civ. P. at the following address: Dustin McDaniel, Attorney General of the State of Arkansas Attorney General?s Of?ce 323 Center Street, Suite 200 Little Rock, AR 72201 w. Duke, Ark?iar No. 96190 TCHELL, WILLIAMS, SELIG, Case Document 7-1 Filed 05/30/14 Page 6 of 6 GATES WOODYARD, P.L.L.C. 425 West Capitol Avenue, Suite 1300 Little Rock, Arkansas 7220] Telephone: (501) 683-8842 Facsimile: (501) 918-7842 Email: jduke@mwlaw.eem