By Mike Scarcella
(Reuters) -A U.S. judge on Friday rejected a bid by China-based DJI, the world’s largest drone maker, to be removed from the U.S. Defense Department’s list of companies allegedly working with Beijing’s military.
In his ruling, U.S. District Judge Paul Friedman in Washington, D.C., said the Defense Department had substantial evidence supporting its finding that DJI, which sells more than half of all U.S. commercial drones, contributes to the “Chinese defense industrial base.”
DJI had urged the court to order its removal from the Pentagon list designating it as a Chinese military company, saying it “is neither owned nor controlled by the Chinese military.”
DJI and a lawyer for the company did not immediately respond to requests for comment. The Defense Department declined to comment.
Trump has ordered the Defense Department to rename itself the Department of War, a change that will require action by Congress.
Placement on the Pentagon list can prevent a company from accessing certain U.S. contracts, grants and other programs, Friedman said.
U.S. companies face increased national security risks if they do business with an entity that the Defense Department has accused of working with the Chinese military.
In its lawsuit, DJI said the Defense Department’s addition of the company on the list was “unlawful and misguided.” It said it has “lost business deals, been stigmatized as a national security threat, and been banned from contracting with multiple federal government agencies.”
The Justice Department in a court filing told Friedman that the U.S. “has long expressed significant concerns about the national security threat posed by the relationship between Chinese technology companies and the Chinese state.”
Friedman in July ruled for the government in a dispute involving China-based lidar manufacturer Hesai Group, which also sued over the U.S. decision to add it to a list of companies allegedly working with Beijing’s military. Hesai has appealed Friedman’s order.
(Reporting by Mike Scarcella; Editing by Leslie Adler)
