AINEWS
The D.C. Circuit told the lower court it erred by relying only on the unclassified record; DJI's designation stays in force for now, and a broader 2027 purchase ban still approaches.
A federal appeals court did not pull DJI off the Pentagon's list of companies treated as Chinese military affiliates. It told the lower court that, on remand, it may now consider the classified record the first trial was barred from seeing.
On Friday Aug 14, the U.S. Court of Appeals for the D.C. Circuit ruled the district court erred by relying only on the unclassified record when it concluded that DJI contributes to the Chinese defense industrial base. The appeals court vacated the prior dismissal and sent the case back for a new trial, according to a Reuters wire published Aug 14. The lawsuit itself, SZ DJI Technology Co. Ltd. v. U.S. Department of Defense, challenges DJI's placement on a Pentagon list that treats named companies as affiliated with the Chinese military.
The list, maintained by the Department of Defense, bars the agency from contracting with designated companies. A separate statutory provision will block third parties from buying DJI's products using federal funds starting in 2027, according to a separate Reuters wire. The two mechanisms are different. The first restricts federal procurement now. The second will restrict a much wider set of buyers in about eighteen months.
What changes immediately: nothing operational. DJI is still on the list. Federal agencies still cannot contract with it, and the third-party purchase ban still arrives in 2027. What changes procedurally is who can see what. The first trial was decided on a public record only. The appeals court held that was a mistake. On remand, the district court may examine the classified record, the very record the original designation rested on. The lower court's job is to decide whether DJI belongs on the list with the same evidence the Pentagon used to put it there.
DJI is the world's largest drone maker, with deep penetration in U.S. commercial and public-safety markets: crop surveys, power-line inspections, search-and-rescue work, mapping. A civilian operator who flies a DJI drone today faces the same legal status as one who flew it last week. The retrial shifts the path to a possible removal. It does not change the ground truth on the ground.
DJI's October 2025 appeal statement framed the prior District Court ruling as a partial win: the lower court rejected most of the Pentagon's allegations and found no basis for claims that DJI is owned or controlled by the Chinese Communist Party or affiliated with China's Ministry of Industry and Information Technology. The appeals court's decision does not disturb those findings. It reopens the question that mattered: whether the unclassified record, standing alone, was enough to support the designation.
DJI is one of a growing number of Chinese companies challenging placement on the Pentagon list. The court vacated the dismissal and reopened the classified record on remand. The merits decision is still ahead.
The next milestone is the district court's schedule on remand. A 2027 statutory deadline is now the hard clock on the litigation, even if the case is not resolved before then.