DJI lost its lawsuit against the U.S. Department of Defense on September 26, 2025, when a federal judge in Washington ruled that the Pentagon could keep the Chinese drone maker on its list of “Chinese military companies.” The DJI Pentagon lawsuit, filed under the Administrative Procedure Act, asked the court to strike the designation as unlawful. Judge Paul Friedman granted the government’s cross-motion for summary judgment instead. DJI appealed to the U.S. Court of Appeals for the D.C. Circuit on October 14, 2025, and that appeal is still pending.
Why the Designation Matters
The list at issue is the Section 1260H list, created by the National Defense Authorization Act for Fiscal Year 2021. It directs the Defense Department to publish, annually through at least 2030, the names of companies it considers Chinese military companies operating in the United States, whether directly or indirectly.
A company can be listed if it is owned, controlled by, or affiliated with the People’s Liberation Army or China’s Ministry of State Security. It can also be listed as a “military-civil fusion contributor” to the Chinese defense industrial base, a category triggered by things like receiving Chinese government science and technology assistance, holding military production licenses, or being affiliated with agencies involved in defense-industrial planning.
The consequences have grown teeth. Under Section 805 of the FY 2024 NDAA, the Defense Department is barred from entering or renewing contracts with listed companies starting June 30, 2026, and from contracting for goods or services produced by them starting June 30, 2027. Listed companies also face potential investment restrictions and lobbying-related procurement bans.
The Pentagon added DJI to the 1260H list in October 2022 and reaffirmed the designation in January 2024.
What DJI Argued
DJI filed suit in the U.S. District Court for the District of Columbia on October 18, 2024, under case number 1:24-cv-02970. The complaint named then-Defense Secretary Lloyd Austin and other officials, alleged four separate APA violations, and asked the court to declare the designation unlawful, vacate it, and permanently enjoin its enforcement. DJI called the listing “unlawful and misguided” and said the company “is neither owned nor controlled by the Chinese military.”
How the Court Ruled
Judge Friedman found that the Defense Department produced “substantial evidence” that DJI contributes to the Chinese defense industrial base. The court held that DJI met three of the statutory definitions for a military-civil fusion contributor under Section 1260H.
First, the court treated DJI’s “National Enterprise Technology Center” designation from China’s National Development and Reform Commission as government assistance received through the military-industrial planning apparatus. The judge noted that the NETC status provides DJI with cash subsidies, special financial support, and tax benefits.
Second, the court found sufficient evidence of DJI’s affiliation with the Ministry of Industry and Information Technology through research partnerships and projects.
Third, the court found that DJI had ties to a military-civil fusion enterprise zone or received assistance through one.
The ruling also observed that DJI’s drone technology has “both substantial theoretical and actual military applications,” pointing to documented modifications of DJI drones for combat use in conflicts including the war in Ukraine. Whether DJI’s own policies prohibit military use of its products was “irrelevant,” the judge held, because the statutory test looks at what the technology can do, not what the manufacturer intends.
The court did reject several of the government’s other justifications. Judge Friedman found insufficient evidence that DJI is owned or controlled by the Chinese Communist Party, that it is affiliated with the Ministry of Industry and Information Technology in the specific manner the government initially alleged, or that it is affiliated with a specific military-civil fusion enterprise zone the government identified. Because the statute requires only one qualifying definition, the three findings that survived were enough to sustain the listing.
DJI’s Response and the Pending Appeal
DJI described the ruling as a partial win, emphasizing that the court “affirmatively rejected most of DoD’s allegations.” The company challenged the court’s reading of the NETC designation, arguing it is a broad recognition of “industry-leading technological innovation capabilities” awarded to companies across sectors from food to apparel and “does not suggest any military connection.” DJI also noted that no evidence was presented showing its products have been used by the Chinese military, and repeated that it was “the first drone company to publicly denounce and actively discourage the combat use of its products.”
The appeal to the D.C. Circuit was filed on October 14, 2025. No oral arguments or rulings have been reported.
How Earlier Challenges Fared
Other Chinese companies have challenged Pentagon designations, and earlier ones had more success than DJI.
Xiaomi Corporation was designated in January 2021, sued in the D.C. District Court, and won a preliminary injunction after the judge concluded the Pentagon had failed to develop sufficient evidence. The Defense Department declined to appeal and removed Xiaomi from the list in May 2021. Luokung Technology Corp. won a similar injunction around the same time, with the court rejecting the government’s broad reading of “affiliation” as having “almost no limiting principle.”
Those cases involved a different and older authority, Section 1237 of the FY 1999 NDAA, and a thinner evidentiary record. Under the newer Section 1260H framework, the Pentagon built a more detailed case against DJI.
Hesai Group, a lidar manufacturer added to the 1260H list in January 2024, sued and secured removal in October 2024. The Pentagon immediately redesignated the company “based on the latest information available,” showing that even a courtroom win may not produce a lasting result.
Other Restrictions the Pentagon Case Doesn’t Touch
The 1260H listing is only one of several U.S. restrictions on DJI, and the Pentagon lawsuit does not affect the others. DJI has been on the Commerce Department’s Entity List since December 21, 2020, which restricts American suppliers from exporting components, software, and technology to DJI without a license that is presumptively denied. Starting around October 2024, U.S. Customs and Border Protection began blocking DJI drone imports under the Uyghur Forced Labor Prevention Act; DJI has called those allegations “entirely unfounded and categorically false.”
Separately, on December 22, 2025, the FCC added DJI to its Covered List following a national security determination by an interagency body convened by the White House. That listing bars the FCC from authorizing new DJI products for the U.S. market: any model that did not receive equipment authorization before December 23, 2025, cannot legally be sold in the country, though previously authorized models remain available and DJI can push firmware and software updates through at least January 2027. DJI filed a separate petition for review of the FCC order in the Ninth Circuit on February 20, 2026, and briefing there is stayed while the court considers the FCC’s motion to dismiss on exhaustion grounds.
Even if DJI wins its D.C. Circuit appeal and comes off the 1260H list, the Entity List placement, the customs holdups, and the FCC Covered List would each remain in force on their own terms.