U.S. Appeals Court Sends DJI’s Pentagon Blacklist Designation Back to Lower Court

On Friday, the U.S. Court of Appeals for the District of Columbia Circuit ordered that the case challenging DJI’s inclusion on the Pentagon’s Section 1260H “Chinese military companies” list be sent back to the district court for further review of one element of the Defense Department’s justification. The ruling did not remove DJI from the list but required the lower court to reconsider the agency’s finding that the company contributes to China’s defense industrial base.

South China Morning PostDJI Wins Partial Reversal Of Pentagon Blacklist Ruling Over Fully Redacted Evidence

The Defense Department published a new Section 1260H list on June 10, 2026, placing DJI among firms alleged to be linked to China’s industry ministry, the People’s Armed Police, a “Single Champion” status and a military-civil fusion enterprise zone. Companies on the list are barred from contracts with the Defense Department and the Department of Homeland Security, lose access to certain Energy Department funds, and, according to Reuters, face a broader prohibition on purchases through third parties that will take effect in 2027.

DJI Wins Partial Reversal Of Pentagon Blacklist Ruling Over Fully Redacted Evidence

The three-judge panel—Chief Judge Srinivasan, Judge Wilkins and Judge Garcia—rejected DJI’s due-process, evidence-access and unequal-treatment arguments, but agreed that the district court had improperly upheld the Defense Department’s defense-industrial-base finding without reviewing the classified record supporting it. Congressional testimony cited in the case notes that DJI holds 90 percent of the global consumer-drone market; the court said that lost contracts and state bans do not rise to the level of precluding the company from doing business. The Pentagon’s public evidence relies on DJI’s 2021 designation as a National Enterprise Technology Center by China’s National Development and Reform Commission, a status that provides tax breaks and subsidies. The court found it reasonable to infer that DJI receives such government assistance. The panel also observed that the Secretary of Defense had offered no explanation for why companies such as Volkswagen, Nissan and Nokia Bell were not listed despite similar Chinese affiliations.

DJI Wins Partial Reversal Of Pentagon Blacklist Ruling Over Fully Redacted Evidence South China Morning Post

The Defense Department declined to comment on the ongoing litigation.

South China Morning Post

While the appeal proceeds, DJI remains subject to the contractual bans and funding restrictions tied to the Section 1260H list. The case will return to District Judge Paul Friedman, who previously upheld the designation. A final ruling could determine whether DJI can regain access to U.S. government contracts and influence how classified evidence is evaluated in future blacklist challenges.

DJI Wins Partial Reversal Of Pentagon Blacklist Ruling Over Fully Redacted Evidence