Appeals Court Partially Reverses Ruling in DJI Challenge to Pentagon Designation

D.C. Circuit sends part of the case back to the district court as DJI continues to face separate U.S. market restrictions

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

In an August 14 decision, the appeals court affirmed parts of the district court’s ruling, reversed one part, and sent the case back for further proceedings. The decision does not remove DJI from the Department of Defense list.

DJI had challenged its January 2025 designation on four grounds. The appeals court rejected three of those arguments. It rejected DJI’s due process claim, upheld the finding that substantial evidence supported the conclusion that DJI was receiving certain assistance from the Chinese government, and rejected DJI’s argument concerning the treatment of other companies.

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

Court Finds Problem With Lower Court’s Review

The Department of Defense report included a section titled “DJI Contributes to the Chinese Defense Industrial Base.” However, the explanation supporting that conclusion was entirely redacted from the unclassified record.

The appeals court found that the district court should not have relied on other information and arguments from government attorneys to uphold that finding.

“There is, in other words, no publicly stated rationale for why the Secretary believes DJI contributes to the Chinese defense industrial base,” the appeals court wrote.

The D.C. Circuit sent that issue back to the district court. The lower court may now examine the classified record and determine whether it supports the Defense Department’s finding.

DJI remains on the Section 1260H list. The Department of Defense also included DJI on a new list published in June 2026, with additional reasons for the designation. The appeals court noted the new designation but did not decide whether those reasons are sufficient to support it.

DJI Welcomes Partial Reversal

A DJI spokesperson welcomed the August 14 ruling.

“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 Court’s finding that the public record contained insufficient evidence is a significant step toward correcting an unjustified designation. The decision reinforces what DJI has consistently maintained: DJI is not a military company. We are a privately held company that has revolutionized the consumer and commercial drone markets, consistently condemned the use of our products in combat, and taken active steps to prevent it. We remain committed to the responsible development of civilian technologies, from drones to handheld imaging products. We look forward to continuing to set the record straight as the case moves forward.”

Separate FCC Restrictions Remain

The Pentagon case is only one part of the regulatory environment affecting DJI and other foreign drone manufacturers in the United States.

Separately, the Federal Communications Commission added foreign-produced UAS and UAS critical components to its Covered List on December 22, 2025. The FCC’s current Covered List continues to include that category, subject to specified exceptions.

The FCC action applies broadly to all foreign-produced UAS rather than resulting from the Section 1260H ruling at issue in DJI’s lawsuit. The August 14 D.C. Circuit decision therefore does not reverse or remove the separate FCC Covered List restrictions.

Read more:

• DJI Warns FCC Proposal Could Restrict Widely Used Commercial Drones
• DJI Releases Independent Security Assessment as FCC Covered List Debate Continues
• Pentagon Filing Opposes DJI Petition, Citing National Security Risks and Classified Information