DJI Appeals Court Ruling on Pentagon’s ‘Chinese Military Company’ Label Despite Winning on Most Allegations

DJI filed an appeal today with the U.S. Court of Appeals for the D.C. Circuit, challenging a federal court decision that upheld the Department of Defense’s designation of the drone maker as a “Chinese Military Company” despite the court rejecting most of the government’s allegations. The October 14 announcement marks the latest chapter in a legal battle that could reshape the American drone industry.

The D.C. District Court ruled on September 26 that DJI would remain on the Pentagon’s Section 1260H list, even as Judge Paul Friedman’s decision explicitly rejected the majority of the Defense Department’s claims about the world’s largest drone manufacturer.

Court Rejected Most DoD Allegations

The ruling found no basis for the DoD’s assertions that DJI is owned or controlled by the Chinese Communist Party, affiliated with China’s Ministry of Industry and Information Technology, or linked to any military-civil fusion enterprise zone. These findings directly support DJI’s longstanding position that it operates independently of Chinese government control.

Judge Friedman upheld only two of the Pentagon’s claims, and both actually reinforce DJI’s civilian status rather than suggest military connections. First, DJI holds National Enterprise Technology Center (NETC) status, which the court acknowledged is “widely granted to companies with industry-leading technological innovation capabilities” across multiple sectors, including major U.S. companies in food, apparel, and automotive industries. Second, the court agreed DJI products have “substantial dual-use applications” because, like many commercial technologies available off-the-shelf, they could theoretically be misused in military contexts.

Critically, the court found no evidence of actual misuse by the Chinese military.

Real-World Impact on Drone Operators

The “Chinese Military Company” designation, first applied in October 2022, has created significant challenges for DJI and American drone operators. The company filed for summary judgment in March, arguing the DoD lacked substantial evidence for its claims. The label restricts federal agency contracts and influences private sector partnerships, even though the company controls approximately 76% of the U.S. consumer drone market.

“We respect the Court’s process but are disappointed that the designation remains in place despite findings that reject the core of the DoD’s allegations,” said Adam Welsh, DJI spokesperson. “We will continue to defend the integrity of our company as the findings reaffirm what we have maintained all along — that DJI operates independently, has no government or military affiliation, and is committed to the responsible development of drone technology.”

Ban Threat Looms Beyond Court Battle

The legal fight unfolds against a broader backdrop of regulatory pressure. While Congress removed the Countering CCP Drones Act from the final 2025 National Defense Authorization Act in December 2024, lawmakers inserted language requiring a federal security audit of Chinese drone manufacturers by December 23, 2025. If no agency completes the review, DJI will automatically be added to the FCC’s Covered List, effectively banning new DJI products from the U.S. market.

DJI has consistently opposed military use of its products, becoming the first drone company to publicly denounce combat applications. The company suspended sales in Russia and Ukraine in 2022 and has never manufactured military equipment or marketed drones for combat operations.

DroneXL’s Take

DJI finds itself in a legal paradox where it won on the facts but lost on procedure. Judge Friedman’s ruling rejected the core allegations about Chinese government control yet deferred to the Pentagon’s “broad discretion” in national security matters. This sets a troubling precedent where agencies can maintain designations even when courts find most evidence insufficient.

The December 2025 NDAA deadline creates additional uncertainty. Six months after the law passed, no federal agency has stepped forward to conduct the mandated security review. This bureaucratic inaction could trigger an automatic ban regardless of any actual security findings—a outcome that would harm thousands of commercial operators, first responders, and agricultural businesses that depend on DJI’s cost-effective technology.

The appeal represents more than corporate self-interest. It’s a test of whether national security designations require actual evidence or merely allegations. For drone pilots watching this case, the stakes are clear: continued access to industry-leading tools hangs in the balance while politicians and courts debate national security theater versus demonstrated facts.

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