DJI has failed with its legal bid to get removed from the U.S. Defense Department’s list of companies claimed to work with the Chinese military. DJI filed its lawsuit against the U.S. Department of Defense in October last year. The Defense Department had placed DJI on a Pentagon list which designated it as a Chinese military company.
In the lawsuit, DJI claimed it was “neither owned nor controlled by the Chinese military.” DJI also said it had “lost business deals, been stigmatized as a national security threat, and been banned from contracting with multiple federal government agencies.” DJI alleged that U.S. and international customers had “terminated existing contracts with DJI and refused to enter into new ones” due to the company being on the list. In addition, DJI called the Defense Department’s decision “unlawful and misguided.”
What did the judge decide?
U.S. District Judge Paul Friedman, in Washington, D.C., largely ruled against DJI. Judge Friedman said that the Defense Department had substantial evidence supporting its finding that DJI contributes to the “Chinese defense industrial base.” The Justice Department had submitted that the U.S. had “long expressed significant concerns about the national security threat posed by the relationship between Chinese technology companies and the Chinese state”. However, Judge Friedman did reject some of the U.S. government’s other reasons for adding DJI to the Pentagon’s list of companies.
How has DJI responded?
Since the ruling, DJI issued a statement expressing its disappointment that Judge Friedman upheld the Defense Department’s decision to add DJI to its list. DJI also said that “This decision was based on a single rationale that applies to many companies that have never been listed.” DJI stated it was evaluating its legal options and may be considering an appeal.
What we think
The latest court ruling against DJI is another blow for its U.S. business. DJI currently sells more than half of all U.S. commercial drones, so it’s an important sales market. However, U.S. companies face increased national security risks if they do business with a company that the Defense Department has deemed to be working with the Chinese military. DJI has also faced issues with U.S. Customs stopping imports of its drones. The threat of a complete ban is still hanging over the company as well. In addition, several of DJI’s most recent products haven’t received a U.S. release. With this latest court decision going against the company, the future for DJI in North America is even more uncertain.
