Appeals Court Partially Overturns Ruling in DJI’s Challenge to Pentagon Designation

D.C. Circuit Partially Reverses Lower Court Ruling in DJI Case

The U.S. Court of Appeals for the D.C. Circuit has partially reversed a lower court ruling regarding DJI’s designation by the Department of Defense as a “Chinese military company.”

Details of the Court’s Decision

In a decision issued on August 14, the appeals court upheld parts of the district court’s ruling, reversed one aspect, and remanded the case for further proceedings. Notably, this ruling does not remove DJI from the Department of Defense’s list.

DJI had challenged its designation from January 2025 on four grounds. The appeals court rejected three of these arguments, including:

• The due process claim made by DJI.
• The conclusion that substantial evidence supported the notion that DJI was receiving assistance from the Chinese government.
• The argument regarding the treatment of other companies in similar situations.

However, the court sided with DJI on a fourth issue concerning the finding that the company “contributes” to the Chinese defense industrial base.

Court Critiques Lower Court’s Review Process

The Department of Defense’s report included a section titled “DJI Contributes to the Chinese Defense Industrial Base,” but the rationale supporting this conclusion was entirely redacted from the unclassified record. The appeals court determined that the district court should not have relied on other information and arguments from government attorneys to uphold this finding.

The court stated, “There is, in other words, no publicly stated rationale for why the Secretary believes DJI contributes to the Chinese defense industrial base.” As a result, the D.C. Circuit has sent this issue back to the district court for further examination of the classified record to determine if it supports the Defense Department’s conclusion.

DJI remains on the Section 1260H list, and the Department of Defense included the company on a new list published in June 2026, providing additional reasons for the designation. The appeals court acknowledged this new designation but did not assess whether the reasons provided are adequate to support it.

DJI Responds to the Ruling

A spokesperson for DJI expressed approval of the August 14 ruling, stating, “DJI welcomes today’s decision by the U.S. Court of Appeals for the D.C. Circuit, which partially reversed the lower court’s ruling and sent the case back for further consideration.”

The spokesperson emphasized that the court’s finding of insufficient evidence in the public record is a significant step toward correcting what they view as an unjustified designation. They reiterated that DJI is not a military company but a privately held entity that has transformed the consumer and commercial drone markets while actively opposing the use of its products in combat.

Ongoing Regulatory Challenges

The Pentagon case represents only one aspect of the regulatory landscape impacting DJI and other foreign drone manufacturers in the United States. Separately, the Federal Communications Commission (FCC) added foreign-produced Unmanned Aircraft Systems (UAS) and critical components to its Covered List on December 22, 2025. This list remains in effect, subject to specified exceptions.

The FCC’s action applies broadly to all foreign-produced UAS and is not a direct result of the Section 1260H ruling involved in DJI’s lawsuit. Therefore, the August 14 decision by the D.C. Circuit does not alter or eliminate the separate FCC Covered List restrictions.