DJI Challenges U.S. Defense Department’s Military Designation in Federal Court

China-based drone manufacturer DJI has filed a lawsuit against the United States Department of Defense following the Pentagon‘s decision to include it on a list of companies allegedly linked to Beijing’s military activities. The company claims that this classification is unjustified and has resulted in substantial financial losses.

DJI, which dominates the global commercial drone market and is responsible for over half of all U.S. drone sales, petitioned a U.S. District Judge in Washington to mandate its removal from the list. The company argues that it “is neither owned nor controlled by the Chinese military,” according to the filed complaint.

Being designated as a “Chinese military company” serves as a notification regarding potential national security threats for U.S. businesses engaging with such entities. DJI asserts that the Defense Department‘s decision has unlawfully harmed its business, leading to lost contracts and reputational damage, while preventing federal government collaborations.

The lawsuit indicates that, due to this categorization, “U.S. and international customers have terminated existing contracts with DJI and refuse to enter into new ones.” DJI notes that it initiated legal proceedings as the Pentagon failed to engage with the company regarding the designation for over 16 months, leaving it with “no alternative other than to seek relief in federal court.”

This legal contention comes amidst ongoing tensions between China and the United States, with numerous actions by Washington aimed at curbing the influence of Chinese enterprises perceived as national security threats. In recent years, companies like AVIC, YMTC, China Mobile, and CNOOC have faced similar scrutiny by U.S. authorities.

Earlier, lidar manufacturer Hesai Group also challenged its designation by the Pentagon, highlighting the ongoing friction resulting from these listings. The Department of Defense recently removed one company from the list, only to announce its re-listing based on security concerns.

The pressures on DJI have intensified, as highlighted by a recent incident involving U.S. Customs and Border Protection. The agency has prohibited some DJI drones from entry, citing compliance with the Uyghur Forced Labor Prevention Act. DJI states that forced labor is absent throughout its manufacturing processes.

Concerns from U.S. lawmakers about potential surveillance and security threats posed by DJI drones persist, though the company denies these allegations. In legislative developments, a proposed bill seeks to restrict DJI’s drones from operating within the United States, pending Senate action. Meanwhile, the Commerce Department has been soliciting feedback on possible restrictions against Chinese drones, which could lead to a comprehensive ban similar to proposed limits on Chinese vehicles.