DJI Takes Legal Action Against US DoD Over 'Chinese Military Company' Label

DJI Takes Legal Action Against US Government

DJI, the predominant name in airborne drones, has initiated legal proceedings against the US Department of Defense (DoD), aiming to remove its designation as a "Chinese Military Company." The company asserts that it has no affiliation with the Chinese government and argues that this classification has resulted in significant detriments, including lost business opportunities and a tarnished reputation.

Impact of the Designation

Since being categorized as a military entity in 2022, DJI claims that the repercussions have been severe:

• Loss of Business Deals: The company's ability to secure contracts has been compromised.
• Stigmatization: Employees report increased incidents of harassment and public insult.
• Federal Bans: DJI has been barred from various federal government contracts.

Contentions Regarding Designation

DJI alleges that the DoD failed to provide sufficient justification for its classification until pressured by the potential lawsuit. When an explanation was finally offered, DJI contends it was rife with inaccuracies.

Broader Scrutiny from US Government

This is not an isolated incident, as several US government agencies have shown apprehension regarding DJI's operations:

• The US Army instructed units to stop utilizing DJI drones back in 2017.
• The US Interior Department grounded its drone fleet due to security fears in 2019.
• In 2020, the Department of Commerce included DJI on its Entity List, obstructing US technology exports to the company.
• In 2021, the Treasury Department labeled DJI as part of the Non-SDN Chinese Military Industrial Complex, linking it to surveillance operations targeting Uyghurs.

Current Restrictions

These government actions led to limitations on the procurement of new DJI drones by certain federal entities. More recently, US customs have prevented some DJI drones from entering the country, citing the Uyghur Forced Labor Prevention Act.

DJI's Defense Against Accusations

DJI staunchly defends its position, arguing that:

• The company is not controlled by the Chinese government.
• It has no involvement in the treatment of Uyghurs.
• Details surrounding the misuse of their products are beyond their control after sale.
• Independent audits conducted by consulting companies and various US agencies, including the DoD, have found no security risks associated with their drones.

Ownership and Investments

While acknowledging that Chinese state-backed investment funds hold minor stakes, DJI emphasizes that these holdings are negligible, with one fund owning less than 1% of shares and the other having divested entirely.

Future of DJI in the US Market

Congress is contemplating a thorough ban on the importation of new DJI drones due to perceived national security threats. While the House of Representatives has passed such a ban, the Senate version currently does not include this stipulation. If enacted, existing DJI drones may still be used by current owners.

Conclusion

As DJI continues to navigate this complex legal landscape, the outcome of their lawsuit against the DoD may play a significant role in the future of the company's operations within the US. The situation remains fluid, with potential implications for both consumers and the broader technology marketplace.