Overview
- A three-judge D.C. Circuit panel ordered the lower court on Friday to reconsider DJI’s challenge and allowed the district court to examine the classified record when deciding whether the company should remain on the Pentagon’s Section 1260H list.
- The district judge previously upheld DJI’s placement largely on the grounds that it is a National Enterprise Technology Center and that its drones have dual-use military applications, while rejecting most claims that the company is owned or controlled by China’s military or the Chinese Communist Party.
- Section 1260H already bars the Defense Department from contracting with designated firms and a planned wider ban on buying their products through third parties is set to take effect in 2027, raising stakes for government agencies and contractors.
- DJI says the designation has caused concrete commercial harm, including lost deals and exclusion from federal contracting, and the appeals decision gives the company a renewed path to seek removal from the list.
- The remand sharpens a larger legal question about what proof the Pentagon must produce to label firms as supporting China’s military, a test that will shape future challenges by other Chinese companies and U.S. tech sourcing policy.