Drone manufacturer DJI has taken legal action against the US Department of Defense (DoD) after being erroneously listed as a “Chinese military company.” The lawsuit, filed on Friday, challenges the DoD’s designation, asserting that it is unfounded and has inflicted substantial financial and reputational damage on the company.
A DJI spokesperson stated that the lawsuit was pursued after the company’s sixteen-month-long attempts to engage with the DoD proved unsuccessful, leaving DJI with no alternative but to seek relief through federal court. “DJI is not owned or controlled by the Chinese military, and the DoD itself acknowledges that DJI makes consumer and commercial drones, not military drones,” the spokesperson clarified.
DJI was added to the DoD’s list in 2022, following similar actions by other US government agencies. In 2020, DJI was placed on the Department of Commerce’s Entity List, effectively barring US companies from selling products to it. The following year, the company was added to the Treasury Department’s investment blocklist due to allegations of involvement in the surveillance of Uyghur Muslims in Xinjiang. DJI has consistently denied these allegations, asserting, “We have nothing to do with the treatment of Uyghurs in Xinjiang.”
In its lawsuit, DJI contends that the listing has resulted in “ongoing financial and reputational harm, including lost business, and employees have been stigmatized and harassed.” The company argues that the DoD’s report justifying the listing is fundamentally flawed, stating, “The Report applies the wrong legal standard, confuses individuals with common Chinese names, and relies on stale facts and attenuated connections that fall short of establishing that DJI is a Chinese military company.”
DJI also highlights its ownership structure, noting that founder and CEO Frank Wang, along with three early-stage investors, collectively hold 99% of the company’s voting rights and approximately 87.4% of its shares. This concentration of ownership underscores DJI’s independence from the Chinese military and counters the DoD’s classification.
The lawsuit seeks to have DJI removed from the DoD list and to secure damages for the harm caused by the designation. Additionally, DJI calls for a comprehensive review of the DoD’s processes and criteria for such listings to prevent similar misclassifications in the future.
Industry analysts view DJI’s legal move as part of broader tensions between US authorities and Chinese tech companies, particularly those accused of espionage or human rights violations. The outcome of this lawsuit could set a significant precedent for how the US government handles allegations against foreign companies and their potential ties to military activities.
As the case progresses, it remains to be seen how the courts will interpret the evidence presented by both DJI and the DoD, and what implications this will have for other Chinese companies operating in the US market. In the meantime, DJI continues to defend its reputation and business interests, maintaining its position as a leader in the global drone industry.
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