DJI, the world’s main shopper drone producer, has lengthy touted its dedication to innovation and technological development. Nonetheless, a more in-depth examination of the corporate’s operations reveals a troubling sample of moral lapses and questionable partnerships that increase critical considerations about its function in world affairs.
DJI’s merchandise have undoubtedly revolutionized industries starting from agriculture to filmmaking. But, beneath this veneer of technological progress lies an organization that has been implicated in a collection of human rights abuses and nationwide safety threats.
One of the crucial egregious examples of DJI’s misconduct is its involvement within the surveillance of Uyghur Muslims in China’s Xinjiang area. The corporate’s drones have been used to trace and monitor Uyghurs, contributing to a system of mass repression that has been condemned by worldwide human rights organizations.
Furthermore, DJI’s expertise has additionally been exploited by authoritarian regimes all over the world. The corporate’s drones have been used to suppress dissent, spy on political opponents, and wage warfare in opposition to civilians. This raises critical questions on DJI’s function in enabling human rights abuses and undermining democratic values.
Whereas DJI could declare to be a impartial expertise supplier, its actions counsel in any other case. The corporate’s shut ties to the Chinese language authorities and its willingness to promote its merchandise to repressive regimes increase considerations about its potential for use as a instrument of state surveillance and management.
On October 18th 2024, DJI filed a lawsuit to problem the Division of Protection’s (DoD) misguided designation of the corporate as a ‘Chinese language Army Firm’
DJI has vehemently denied this accusation, claiming that it’s a personal firm with no ties to the Chinese language army. Nonetheless, the US authorities has offered proof suggesting that DJI has acquired important funding from the Chinese language authorities and has collaborated with Chinese language army entities.
In its lawsuit, DJI has argued that the DoD’s determination relies on “misguided” data and is opposite to the corporate’s dedication to civilian use. The corporate has additionally pointed to its efforts to adjust to US export controls and to forestall its expertise from getting used for dangerous functions.
DJI’s lawsuit says due to the Protection Division’s “illegal and misguided determination” it has “misplaced enterprise offers, been stigmatized as a nationwide safety menace, and been banned from contracting with a number of federal authorities businesses.”
The corporate added “U.S. and worldwide clients have terminated present contracts with DJI and refuse to enter into new ones.”
Regardless of DJI’s claims, the proof means that the corporate has a historical past of questionable partnerships and a willingness to prioritize revenue over moral issues. The corporate’s involvement in human rights abuses and its potential for use as a instrument of authoritarian regimes warrant a extra crucial evaluation.
It’s time for the worldwide group to take a more in-depth take a look at DJI’s actions. The corporate’s involvement in human rights abuses and its potential for use as a instrument of authoritarian regimes warrant a extra crucial evaluation.
By exposing DJI’s double-edged sword of expertise, we will start to carry the corporate accountable for its actions and promote a extra moral and accountable strategy to drone improvement.
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA Index No. COMPLAINT SZ DJI TECHNOLOGY CO., LTD., Foyer of T2, DJI Sky Metropolis, No. 53 Xianyuan Street, Xili Neighborhood, Xili Road, Nanshan District, Shenzhen, PRC, Plaintiff, – v – U.S. DEPARTMENT OF DEFENSE, 1400 Protection Pentagon, Washington, D.C. 20301, LLOYD J. AUSTIN III, in his official capability as SECRETARY OF THE UNITED STATES DEPARTMENT OF DEFENSE, 1000 Protection Pentagon, Washington, D.C. 20301, LAURA D. TAYLOR-KALE, in her official capability as ASSISTANT SECRETARY OF DEFENSE FOR INDUSTRIAL BASE POLICY, 3010 Protection Pentagon, Washington, D.C. 20301, Defendants. Plaintiff SZ DJI Expertise Co., Ltd. (“DJI”), by and thru its undersigned counsel, hereby recordsdata this Grievance in opposition to Defendants, the U.S. Division of Protection (“DoD”), Lloyd J. Austin III, in his official capability as Secretary of Protection, U.S. Division of Protection, and Laura D. Taylor-Kale, in her official capability as Assistant Secretary of Protection for Industrial Base Coverage, alleging as follows: INTRODUCTION 1. DJI is the biggest privately owned vendor of shopper and industrial drones, that are utilized by police departments, hearth departments, different first responders, giant and small corporations, and hobbyists all through the US and the world. This Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 1 of 56
2 lawsuit challenges DoD’s determination to designate DJI as a “Chinese language Army Firm” (“CMC”) although DJI is neither owned nor managed by the Chinese language army, and, as DoD acknowledges, sells solely “shopper and industrial”—not army—drones. 2. DJI, via exterior counsel, sought to interact with DoD over greater than a 16-month interval to grasp the rationale for DJI’s designation, acquire the executive document, and supply DoD with details demonstrating that DJI will not be a CMC underneath the statutory standards. On July 27, 2023, DJI filed a complete delisting petition establishing that DoD was required to take away DJI from the CMC Listing pursuant to its statutory responsibility to “make . . . deletions” from the Listing “on an ongoing foundation based mostly on the newest data accessible.” 3. Regardless of these efforts, DoD refused to meaningfully have interaction, declining to offer its rationale for DJI’s designation and ignoring DJI’s requests for a gathering. Then, with out discover, on January 31, 2024, DoD redesignated DJI. On September 6, 2024, DJI, having decided that it had no different affordable possibility accessible, knowledgeable DoD that it deliberate to hunt judicial reduction. Solely then did DoD produce a “courtesy copy” of an inner report (the “Report”) that it described as containing the complete rationale for DJI’s designation. 4. The Report, dated November 2023, comprises a scattershot set of claims which can be wholly insufficient to assist DJI’s designation. Amongst quite a few deficiencies, the Report applies the incorrect authorized customary, confuses people with widespread Chinese language names, and depends on stale alleged details and attenuated connections that fall far in need of demonstrating that DJI is a CMC. The Report reveals that DJI was designated via a “deeply flawed” designation course of. Xiaomi Corp. v. Dep’t of Def., Civ. No. 21-280, 2021 WL 950144 (D.D.C. Mar. 12, 2021). Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 2 of 56
3 5. On account of DJI’s designation, which branded the corporate a nationwide safety menace, DJI has suffered ongoing monetary and reputational hurt, together with misplaced enterprise, and DJI workers have been stigmatized and harassed. 6. DoD’s designation of DJI and its failure to take away DJI from the CMC Listing violates the regulation and DJI’s due-process rights. This Courtroom ought to put aside, enjoin, and declare unconstitutional these actions underneath the Administrative Process Act and the U.S. Structure. JURISDICTION AND VENUE 7. This Courtroom has subject-matter jurisdiction over this motion underneath 28 U.S.C. § 1331 (federal-question jurisdiction) and § 2201 (the Declaratory Judgment Act). 8. This Courtroom has the authority to grant declaratory and injunctive reduction underneath 28 U.S.C. §§ 2201 et seq. (the Declaratory Judgment Act), 5 U.S.C. §§ 701 et seq. (the Administrative Process Act) (“APA”), and the equitable energy. 9. Venue is correct underneath 28 U.S.C. 1391(b) and (e) as it is a civil motion through which Defendants are federal businesses and officers appearing of their official capacities, and a considerable a part of the occasions giving rise to those claims occurred within the District of Columbia, and Defendants reside on this district. PARTIES 10. Plaintiff SZ DJI Expertise Co., Ltd. is a privately owned and operated firm headquartered in Shenzhen, China, with workplaces all through Asia, Europe, and the US. The corporate’s merchandise are utilized by customers worldwide. It has a number of U.S. subsidiaries which have greater than 150 workers and repair Unmanned Aerial Autos (“UAVs” or drones) offered in North America. Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 3 of 56
4 11. Defendant Division of Protection (“DoD”) is a division of the Govt Department of the US Authorities and an government company throughout the which means of 5 U.S.C. § 551(1). DoD is answerable for publishing and sustaining the CMC Listing in line with the designation standards in Part 1260H of the FY2021 Nationwide Protection Authorization Act. See Pub. L. No. 116-283. 12. Defendant Lloyd J. Austin III is the Secretary of Protection. In that capability, he oversees the capabilities of DoD, together with the upkeep of the CMC Listing. He’s sued in his official capability. 13. Defendant Laura D. Taylor-Kale is the Assistant Secretary of Protection for Industrial Base Coverage. In that capability, she manages the processes for the designation of entities on the CMC Listing and the elimination of entities from the CMC Listing. She is sued in her official capability. FACTS A. DJI’s Historical past and Enterprise 14. DJI is the biggest shopper and industrial drone firm, supplying nearly all of drones in these markets worldwide. 15. Usually talking, drones are un-piloted plane, however nice variation exists inside that broad definition.1 On one finish of the spectrum are shopper drones, that are much like “distant managed aerial cameras” powered by rechargeable batteries.2 On the opposite finish are army drones, which normally “resemble fixed-wing plane” with an 1 What’s a Drone?, FLYING (Could 20, 2024), https://tinyurl.com/2dk9nhtj. 2 Craig Phillips, A Drone by Any Different Title: The Completely different Sorts of Drones, PBS (Apr. 27, 2017), https://tinyurl.com/3yr367jw. Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 4 of 56
5 “monumental wingspan,” and “are typically powered by gasoline or diesel engines[.]”3 As DoD acknowledges, DJI doesn’t produce army drones. Report at 4. 16. DJI began in 2006 in its founder Frank Wang’s college dorm room. Frank was an engineering pupil whose mannequin drones impressed his professor Li Zexiang, who in flip offered Frank early stage funding for DJI. 17. Henry Lu, Frank’s household pal, managed the corporate’s funds, and Swift Xie, Frank’s highschool pal, managed the corporate’s advertising and marketing. At present, Henry, Swift, and Professor Li stay the biggest shareholders of DJI together with Frank. 18. In 2012, DJI unveiled “Phantom,” the primary ready-to-fly shopper drone that “wouldn’t break aside after its first crash.”4 This was a watershed second in shopper UAVs, and, in 2015, the Smithsonian’s Nationwide Air & Area Museum acquired a duplicate of the drone for show.5 The buyer market embraced DJI merchandise, so DJI stored growing and producing extra.6 19. At present, DJI produces the overwhelming majority of UAVs for customers and industrial enterprises. Its merchandise are extensively accessible: they might be bought on-line via retailers equivalent to Amazon or at brick-and-mortar shops like Finest Purchase, Goal, and Sam’s Membership. 3 How are Army Drones Completely different from Business Drones?, ZENADRONE, https://tinyurl.com/bd2d78ae (final visited Oct. 17, 2024); see additionally What’s a Drone, supra word 1 (noting that some shopper (“private”) drones may be bought for simply $30 whereas NorthropGrumman produces a army drone priced round $500 million). 4 Ryan Mac, Heng Shao & Franki Bi, Bow To Your Billionaire Drone Overlord: Frank Wang’s Quest To Put DJI Robots Into The Sky, FORBES (Could 24, 2015), https://tinyurl.com/49mtk7zc. 5 Arthur Holland Michel, Drones within the Nationwide Air & Area Museum, CTR. FOR THE STUDY OF THE DRONE AT BARD COLL. (Apr. 2, 2015), https://tinyurl.com/3wetxrst. 6 Timeline of DJI Drones, DRDRONE, https://tinyurl.com/2s483dx6 (final visited Oct. 17, 2024). Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 5 of 56
6 20. DJI is the market chief in drone security, which contributes to its merchandise’ world recognition. DJI was the primary main civilian UAV producer to implement geofencing, a mechanism that forestalls UAVs from coming into into or taking off from restricted zones. DJI determines restricted zones, together with airports, energy vegetation, and prisons, based mostly on aviation and public security, and works with native authorities to implement extra geofencing requests. Since 2017, DJI has additionally supplied governments and airports “AeroScope,” a platform that may detect DJI UAVs in actual time. DJI can be the primary UAV firm to combine ADS-B receivers on UAVs, permitting DJI customers to detect crewed plane and keep away from potential collisions. 21. DJI understands the significance of information safety and offers its customers management over the info they generate. DJI UAVs don’t want to connect with the web to function. Following preliminary activation, DJI UAVs can be utilized fully offline in “airplane mode.” DJI additionally affords a “native knowledge mode” that forestalls any knowledge from being transmitted to or from DJI’s flight apps and servers, whereas permitting customers to entry the web for explicit functions like map companies. Third-party consulting companies equivalent to Booz Allen Hamilton, FTI Consulting, and Kivu Consulting have analyzed numerous DJI merchandise and validated their safety.7 So too have the U.S. Division of the Inside, the U.S. Nationwide Oceanic and Atmospheric Administration, the U.S. Division of Homeland Safety, and DoD.8 7 New Unbiased Audit Confirms Sturdy Privateness Controls Accessible To DJI Drone Operators, VIEWPOINTS (Sept. 25, 2024), https://tinyurl.com/2sa8rycs; New Unbiased Audit Finds No Proof of Knowledge Transmission to DJI, China, or Any Sudden Celebration, VIEWPOINTS (Dec. 9, 2021), https://tinyurl.com/yck2krwk (detailing the scope of those safety evaluations and their findings). 8 Extra details about the scope of those safety evaluations and their findings may be discovered at New Unbiased Audit Finds No Proof of Knowledge Transmission to DJI, China, or Any Sudden Celebration, supra word 7; see additionally Chris Mills Robrigo & Maggie Miller, Pentagon report clears use of drones made by prime Chinese language producer, The Hill (June 1, 2021, 4:26pm) https://tinyurl.com/p484ytbb (“An evaluation of the 2 Da Jiang Improvements [DJI] drones constructed for presidency use discovered ‘no malicious code or intent’ and are ‘really helpful to be used by authorities Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 6 of 56
7 B. Use of DJI’s Merchandise in the US 22. In the US, DJI UAVs have been used for years by authorities businesses, giant companies, small companies, and hobbyists. 23. Public Security. Police departments, hearth departments, and different first responders in the US incessantly use DJI UAVs. Based on one research, 924 of the 1,030 public-safety businesses surveyed used DJI UAVs.9 DJI UAVs enhance these businesses’ public security capabilities by, for instance, enhancing response instances, decreasing operational prices, and bettering decision-making by offering better situational perception. “No different firm’s choices come near DJI’s low cost, highly effective drones, specialists say— probably leaving authorities businesses, police and first responders within the lurch if DJI is shut out.”10 24. DJI UAVs present crucial assist to regulation enforcement, bettering officer security by enabling officers to extra readily find and apprehend criminals. 11 For instance, native regulation enforcement in Saginaw, Michigan used thermal imaging on a DJI UAV to arrest a housebreaking suspect.12 And on this context, no affordable various exists to interchange DJI drones.13 entities and forces working with US companies.’”). The report was later disavowed with out clarification in a subsequent press launch. See Division Assertion on DJI Techniques, U.S. Dep’t of Protection (July 23, 2021), https://tinyurl.com/5yv4xerk. 9 See DAN GETTINGER, PUBLIC SAFETY DRONES, CTR. FOR THE STUDY OF THE DRONE AT BARD COLLEGE (March 2020) (3d ed. 2020). 10 Kaveh Waddell, Trying to find the following nice American drone firm, AXIOS (Nov. 23, 2019), https://tinyurl.com/3j25m37v. 11 Kevin Severin, Oklahoma Metropolis Police Sees Success with Drone Program, FOX25 (Sept. 3, 2021, 5:53pm), https://tinyurl.com/mvzazshc. 12 Terry Camp, Saginaw County Sheriff’s Drone Pays Off with Arrest of Two Suspects, ABC 12 NEWS (Nov. 22, 2021), https://tinyurl.com/mnjtc8u7. 13 See Marrian Zhou & Yigan Yu, DJI to the rescue? U.S. police need China drones regardless of Washington clampdown, NIKKEI ASIA (June 14, 2024), https://tinyurl.com/ynnsfrux (“U.S. drones Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 7 of 56
8 25. Equally, many first responders offering reduction throughout pure disasters additionally make use of DJI UAVs. For instance, reduction groups in Tucson, Arizona; Bedford, Virginia; Niagara, Kentucky; Morristown, Tennessee; and Cranford, New Jersey, in addition to others, have deployed DJI UAVs following tornadoes and flooding to view particles, help owners, and decide the correct tools wanted to offer assist.14 26. Because the U.S. Authorities Accountability Workplace (GAO) described in a report final month, the Division of the Inside’s determination to not use Chinese language-made drones (which primarily impacts DJI drones) has left its part bureaus with an inadequate variety of drones to mount an appropriate response in crucial emergency conditions.15 Competitor UAV corporations merely don’t present merchandise with the identical performance on the identical (or any) value level, which means many private and non-private entities use both DJI drones or no drones in any respect.16 value three to 4 instances greater than Chinese language fashions with out providing even the identical degree of expertise.”). 14 Tucson Hearth Division, X (Feb. 9, 2022), https://tinyurl.com/yuvefthf (Tucson, AZ hearth division used DJI drone to discover a bike owner that had crashed into cactus); WDBJ7 Workers, Rescuer Describes Discovery of Misplaced Hikers in Bedford, WDBJ7 (Dec. 26, 2021, 2:54am), https://tinyurl.com/yrfbjady (describing use of a drone and thermal digicam to find two misplaced hikers); Marisa Patwa, Drone Used to Find 90-12 months-Outdated Lacking Niagara Man Who’d Been Trapped Below UTV for Three Days, 44News (Aug. 20, 2021), https://tinyurl.com/phj6twa5 (reporting on the rescue of a 90-year-old man trapped underneath his wrecked automobile due to drone footage); Scott Barkley, Tennessee affiliation first to make use of drone in catastrophe reduction, Baptist Customary (Jan. 10, 2022), https://tinyurl.com/mrpafyp5 (“Morristown, TN’s Nolachucky Baptist Affiliation Catastrophe Aid used DJI drone to seek out lacking teenager”); Miriam McNabb, In NJ, Cranford Police Use Drones for Hurrican Ida Response and Extra, DRONE LIFE (Dec. 10, 2021), https://tinyurl.com/2zamuusa. 15 GOVERNMENT ACCOUNTABILITY OFFICE, FEDERAL LANDS: EFFECTS OF INTERIOR’S POLICIES ON FOREIGN-MADE DRONES (“GAO Report”), 24-106924, 1-2 (Sept. 25, 2024); see additionally Adam Juniper, American anti-DJI legal guidelines dangers assist unfold of wildfires – says US authorities report, YAHOO! NEWS (Oct. 3, 2024), https://tinyurl.com/4dvf7hzj (noting that Inside’s coverage predominantly impacts DJI drones). The GAO Report additionally discovered that the Division of the Inside has additionally needed to curtail its assortment of environmental knowledge, restrict cultural useful resource and historic preservation monitoring applications, halt sure wildlife surveys altogether, and even finish public training initiatives and collaborations with analysis establishments. See GAO Report, supra, at 11-14. 16 See GAO Report, supra word 15, at 6 (observing that Inside’s common per drone value elevated from about $2,600 in fiscal years 2017 via 2020, to over $15,000 in fiscal yr 2023), 7 (“It has been troublesome to seek out compliant drones with ample technological capabilities to totally meet Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 8 of 56
9 27. Employee Security. Giant and small companies alike use DJI UAVs to perform harmful or troublesome duties. For instance, a world vitality firm used DJI UAVs to detect methane over an space too giant to succeed in with handheld units; a railway used DJI UAVs to examine bridge and rail infrastructure; and a pharmaceutical firm used DJI UAVs to distribute important drugs to distant healthcare services.17 28. Agriculture and Environmental Safety. DJI UAVs have incessantly changed manned aircrafts for crop-spraying throughout the nation. They’ve additionally been used for agricultural analysis. 18 And DJI UAVs have develop into indispensable instruments for the research of environmental phenomena that may in any other case have risked the security of wildlife or researchers to look at, equivalent to local weather change, water degree erosion, volcanic eruptions, and geological hazards.19 29. Small Companies and Hobbyists. Small companies and hobbyists use DJI merchandise to perform troublesome duties that add important worth to their services. As an illustration, DJI drones are the preferred amongst professionals and hobbyists mission wants.”); see additionally, e.g., Jim Fisher, The Finest Drones for 2024, PC MAG (Aug. 19, 2024), https://tinyurl.com/3fpwyuss (awarding DJI drones “Finest Drone General,” “Finest Finances Drone,” “Finest Impediment Avoidance System,” “Finest Drone for Professional Video and Cinema,” and “Most Reasonably priced Drone for Vertical Video”). 17 METHANE REPORT, CHEVRON (2022), 9, https://tinyurl.com/2ury6xe8; DroneDeploy and BNSF on Autonomous Actuality Seize: The Distinction Between Automated and Autonomous, DRONE LIFE (Oct. 12, 2022), https://tinyurl.com/ysbvshjn (describing how aerial knowledge helps documenting rail community); Teaming up with Pfizer on New Cargo Drone Undertaking, WE ROBOTICS (Jan. 12, 2021), https://tinyurl.com/bddhsyfn. 18 Alabama Extension First in U.S. to Analysis New Drone Mannequin, ALA. NEWS CTR. (Nov. 19, 2022), https://tinyurl.com/4ymc5nfa; Christina Herrick, Washington State College Companions With UAV Producer on Analysis, GROWING PRODUCE (June 28, 2016), https://tinyurl.com/bdz7d27h. 19 See GAO Report, supra word 15, at 4 (offering examples of “[l]andscapes and pure assets” flights for which the Division of the Inside has used drones); Use of UASs (“Drones”) in 2018 at Kilauea and Past, U.S. GEOLOGICAL SURVEY (June 19, 2020), https://tinyurl.com/zw4u5j2r (DJI UAVs used for knowledge assortment within the wake of the eruption of the Kilauea volcano in Hawaii when the energetic volcano made it not possible for manned plane to acquire data vital for the emergency response). Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 9 of 56
10 within the inventive industries for aerial images and cinematography.20 And lots of different companies use DJI drones as effectively, together with land surveyors, actual property brokers, and building managers. C. DJI’s Dedication to Non-Fight Makes use of of Its UAVs and Sanctions Compliance 30. As a matter of company coverage, DJI neither designs its merchandise nor permits their use for fight functions. DJI prohibits doing enterprise with entities that intend to make use of DJI merchandise for fight. DJI’s distributors and third-party resellers should affirm compliance with this coverage. In step with this coverage, in April 2022, DJI introduced the suspension of drone gross sales and different enterprise in Russia and Ukraine to forestall its merchandise from being jerry-rigged and used within the ongoing warfare.21 31. DJI’s compliance coverage additionally prohibits gross sales of its merchandise (together with by its distributors and resellers) to events or jurisdictions which can be sanctioned by the U.S. Division of the Treasury’s Workplace of International Belongings Management (“OFAC”) and different governments. DJI has a multi-faceted compliance program that employs automated screening and different controls to implement its sanctions coverage. D. DJI’s Independence and Personal Possession 32. DJI’s possession and company governance construction underscore DJI’s independence. DJI is privately owned and managed, and it’s not an agent or 20 James Austin, The Finest Drones for Pictures and Video, N.Y. TIMES (Sept. 6, 2024), https://tinyurl.com/he2wfme9 (naming a number of DJI drones “the perfect drones” for photograph and video use, together with the perfect total, the perfect improve decide, and the perfect finances decide); see additionally Andrew Lanxon, Joshua Goldman, Finest Drones for 2024, CNET (up to date Sept. 22, 2024), https://tinyurl.com/ytv946ys (figuring out DJI drones as its prime 2024 picks for capturing high-quality pictures or movies). 21 Michelle Toh, Chinese language drone maker DJI halts enterprise in Russia and Ukraine, CNN (Apr. 27, 2022), https://tinyurl.com/25e2zzpv. Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 10 of 56
11 instrumentality of any authorities. Frank Wang and the corporate’s early-stage buyers (Henry Lu, Swift Xie, and Li Zexiang) collectively maintain 99% of the corporate’s voting rights and roughly 87.4% of its shares. Since not less than 2020, their shares and voting rights have solely elevated. 33. The following largest group of buyers includes entities within the personal sector and collectively holds 0.4% of the voting rights and seven.2% of the shares. 34. Final, the smallest shareholding group, with a mixed 0.6% of the voting rights and 5.4% of the shares, includes 5 state-owned enterprises in China (two stateowned banks, one state-owned insurance coverage firm, and two municipal funding funds). 35. Not one of the administrators of DJI or its guardian firm, iFlight Expertise Firm Restricted, are a authorities official, a consultant of a authorities or stateowned entity, or a member or officer of the Chinese language Communist Celebration (“CCP”). E. Statutory Framework and Background 1. Part 1260H’s Predecessor 36. DoD designated DJI as a CMC purportedly pursuant to the Nationwide Protection Authorization Act for Fiscal 12 months 2021, Pub. L. No. 116-283, § 1260H, 134 Stat. 3388, 3965 (2021) (“Part 1260H”). 37. Part 1260H’s provisions stem from a now unused statute, Part 1237 of the 1999 Nationwide Protection Authorization Act.22 22 Pub. L. No. 105-261, § 1237, 112 Stat. 1920, 2160 (1998), as amended by Pub. L. No. 106-398, § 1233, 114 Stat. 1654 (2000), and Pub. L. No. 108-375, § 1237, 118 Stat. 1811, 2089 (2004) (“Part 1237”); see additionally Jordan Brunner, Communist Chinese language Army Firms and Part 1237: A Primer, LAWFARE (Mar. 22, 2021), https://tinyurl.com/2s4aaajs (describing the background and historical past of Part 1237). Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 11 of 56
12 38. Part 1237 required the Secretary of Protection to compile a listing of “Communist Chinese language Army Firms” (“CCMCs”), which it outlined as corporations “owned or managed by, or affiliated with, the Individuals’s Liberation Military or a ministry of the federal government of the Individuals’s Republic of China” or “owned or managed by an entity affiliated with the protection industrial base of the Individuals’s Republic of China.” Part 1237. 39. As this Courtroom beforehand noticed, Part 1237 required DoD to designate corporations straight managed by the Chinese language army and authorities, in addition to “quasiindependent companies that have interaction in Chinese language army modernization,” equivalent to “State-Owned Enterprises with in depth ties to China’s protection expertise {industry}, working underneath the efficient management of the Chinese language state army equipment.” Luokung Tech. Corp. v. Dep’t of Def., 538 F. Supp. 3d 174, 187 (D.D.C. 2021). 40. For almost 20 years, nonetheless, DoD didn’t use or in any other case populate the checklist. Then, following stress from Congress, it issued 4 CCMC lists in simply seven months from 2020 to 2021. See id. at 195 n.15; Brunner, supra. 2. This Courtroom Twice Enjoined DoD 41. In 2021, this Courtroom enjoined the DoD—twice—from including two personal corporations to the CCMC Listing. See Xiaomi, 2021 WL 950144, at *13; Luokung, 538 F. Supp. 3d at 191. 42. This Courtroom decided that DoD’s designation of the businesses was “deeply flawed” and “failed to stick to a number of totally different APA necessities.” Xiaomi, 2021 WL 950144 at *8; see additionally Luokung, 538 F. Supp. 3d at 191. DoD’s evaluation was “conclusory” and did little greater than “parrot the language of [the] statute.” Xiaomi, 2021 WL 950144 at *5 (citations omitted). Its alleged proof did not differentiate the Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 12 of 56
13 corporations from “American expertise corporations equivalent to Apple.” Luokung, 538 F. Supp. 3d at 189-90. In each instances, DoD’s factual errors and lack of due diligence led the company to defective conclusions. See id. at 190 n.11. 43. In each instances, this Courtroom took umbrage with DoD’s interpretation of the time period “affiliated with,” reasoning that it set too low a bar. It held that the “overwhelming weight of authority helps” a better threshold for “affiliated with,” i.e., “an organization successfully managed by one other or related to others underneath widespread possession or management.” Xiaomi, 2021 WL 950144 at *7 (quotation omitted). Below DoD’s proposed decrease customary, the checklist of Chinese language Army Firms “would probably embody all Chinese language authorities contractors, even people who, as right here, produce merchandise with no direct army functions.” Luokung, 538 F. Supp. 3d at 187. Congress didn’t intend DoD to designate any Chinese language firm with a unfastened connection to the Chinese language authorities, however solely these “engaged in Chinese language army modernization.” Id. at 186-87 (citing H.R. Rep. 108-491 (2004)) (discussing Part 1237’s legislative historical past). 44. This Courtroom additionally acknowledged that DoD’s failure to afford the events discover and an inexpensive alternative to be heard raised “critical” constitutional considerations. See Xiaomi, 2021 WL 950144, at *8 n.8; Luokung, 538 F. Supp. 3d at 191 n.13. 45. In 2021, DoD declined to enchantment, and eliminated each Xiaomi and Luokung from the Part 1237 Listing. 3. Part 1260H 46. In January 2021, Congress handed the Nationwide Protection Authorization Act for Fiscal 12 months 2021, which included Part 1260H. Pub. L. No. 116-283, § 1237, 134 Stat. 3388, 3965 (2021). Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 13 of 56
14 47. Below Part 1260H, a CMC is any firm “engaged in offering industrial companies, manufacturing, producing, or exporting,” that satisfies not less than one in every of two necessities. Sec. 1260H(d). A CMC is both: (1) “straight or not directly owned, managed, or beneficially owned by, or in an official or unofficial capability appearing as an agent of or on behalf of, the Individuals’s Liberation Military or another group subordinate to the Central Army Fee of the Chinese language Communist Celebration”; or (2) a “military-civil fusion contributor to the Chinese language protection industrial base.” Id. 48. Whereas Congress didn’t outline “military-civil fusion contributor,” it offered eight classes of such corporations. These are: a. “Entities knowingly receiving help from the Authorities of China or the Chinese language Communist Celebration via science and expertise efforts initiated underneath the Chinese language army industrial planning equipment; b. Entities affiliated with the Chinese language Ministry of Trade and Data Expertise, together with analysis partnerships and initiatives; c. Entities receiving help, operational route, or coverage steering from the State Administration for Science, Expertise, and Trade for Nationwide Protection; d. Any entities or subsidiaries outlined as a ‘protection enterprise’ by the State Council of the Individuals’s Republic of China. e. Entities residing in or affiliated with a military-civil fusion enterprise zone or receiving help from the Authorities of China via such enterprise zone; f. Entities awarded with receipt of army manufacturing licenses by the Authorities of China; g. Entities that publicize on nationwide, provincial, and non-governmental army tools procurement platforms within the Individuals’s Republic of China; or h. Some other entities the Secretary determines is acceptable.” Id. 49. Like Part 1237, Part 1260H directs the Secretary of Protection to “determine every entity the Secretary determines, based mostly on the newest data accessible, is working straight or not directly in the US or any of its territories and possessions, that may be a Chinese language Army Firm.” Additional, the Secretary “shall make additions or deletions” to the CMC Listing “on an ongoing foundation based mostly on the newest Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 14 of 56
15 data accessible.” Sec. 1260H(b)(3). After the Secretary has recognized entities qualifying as CMCs, she or he should submit an annual report back to Congress itemizing these entities and publish the unclassified portion of the Listing within the Federal Register. Id.; Sec. 1260(b)(1). 50. As commentators have famous, Part 1260H supplies a “extra exact” definition of Chinese language Army Firm than Part 1237. 23 Its definition removes “affiliat[ion]” with any “Chinese language authorities ministry” as a foundation for designation, permitting “for the more practical focusing on of military-affiliated organizations” moderately than organizations affiliated with “the Chinese language state [more] broadly.”24 51. Part 1260H additionally permits DoD to designate “military-civil fusion contributor[s] to the Chinese language protection industrial base.” Sec. 1260H(d). China’s idea of “military-civil fusion” was carried out by the Chinese language authorities within the Eighties to reform its protection sector, traditionally managed by “state-owned enterprises that stay walled off from the nation’s dynamic industrial financial system.” 25 China sought to copy American “civil-military integration” and its “confirmed monitor document” of innovation.26 As DoD noticed in a 2023 report, military-civil fusion goals to “improve the proportion [of private companies] . . . that contribute to army initiatives and procurements.” 27 Accordingly, “military-civil fusion contributors” refers to “parallels in America’s personal 23 Jordan Brunner & Emily Weinstein, Chinese language Army-Civil Fusion and Part 1260H: Congress Incorporates Protection Contributors, LAWFARE (Could 4, 2021), https://tinyurl.com/mw7fm7sr. 24 Id. 25 Elsa B. Kania & Lorand Laskai, Myths and Realities of China’s Army-Civil Fusion Technique, CNAS (Jan. 28, 2021), https://tinyurl.com/4h84p8r8. 26 Id. 27 Workplace of the Secretary of Protection, ANNUAL REPORT TO CONGRESS: MILITARY AND SECURITY DEVELOPMENTS INVOLVING THE PEOPLE’S REPUBLIC OF CHINA (2023), at 33. Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 15 of 56
16 protection innovation ecosystem,” equivalent to U.S. protection contractors that work hand-in-hand with the army to develop new applied sciences or manufacture protection merchandise.28 52. Since 2021, Congress handed a number of restrictions on entities designated as CMCs. Below the FY2024 Nationwide Protection Authorization Act, Congress banned DoD from contracting with any CMC. Pub. L. 118-31, 137 Stat. 136, § 805(a)(1). And underneath the FY2024 Additional Consolidated Appropriations Act, Congress prohibited the Division of Homeland Safety from doing the identical. Pub. L. No. 118-47, § 536. 53. Not too long ago, two corporations have challenged their designations by DoD underneath Part 1260H, alleging comparable deficiencies as this Courtroom recognized in Xiaomi and Luokung. See Hesai Expertise Co., Ltd v. U.S. Dep’t of Def., No. 24-1381 (D.D.C. Could 13, 2024); Superior Micro-Fabrication Gear Inc. China v. U.S. Dep’t of Def., Civ. A. No. 24-2357 (D.D.C. Aug. 14, 2024). Whereas these instances stay pending, DoD has modified course in Hesai, first deleting, after which redesignating, Hesai as a CMC on the idea of a brand new document. See Hesai, Defs.’ Resp. to Mot. for an Order to Present Trigger, ECF No. 35, 1-2. F. DoD Provides DJI to the CMC Listing with out Discover or Rationalization 54. On October 5, 2022, DoD, citing Part 1260H, launched a listing of entities designated as CMCs working in the US.29 The checklist included DJI however offered no rationale for why DJI—or another firm—was designated. 28 Kania & Laskai, supra word 25. 29 See Entities Recognized as Chinese language Army Firms Working In the US In Accordance With Part 1260H of the William M. (“Mac”) Thornberry Nationwide Protection Authorization Act for Fiscal 12 months 2021, DEP’T OF DEF. (Oct. 5, 2022), https://tinyurl.com/3vnvx94d. Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 16 of 56
17 55. By designating DJI, the federal government branded DJI as a nationwide safety menace, which was extensively reported within the media30 and has triggered important and ongoing hurt to the corporate. Some clients canceled contracts to buy DJI merchandise, whereas many extra expressed concern about additional enterprise dealings with the corporate. The designation stigmatized the corporate and its workers, together with the over 150 workers residing in the US. 56. And the designation was incorrect on its face. DJI will not be “straight, not directly, or beneficially owned, managed or appearing on behalf of the Individuals’s Liberation Military or another group subordinate to the Central Army Fee,” as a result of neither the Individuals’s Liberation Military (“PLA”) nor the Central Army Fee personal any stake in DJI, and DJI actually doesn’t function underneath their management. And DJI will not be a “militarycivil fusion contributor to the Chinese language protection industrial base” as a result of DJI doesn’t manufacture or develop army merchandise and doesn’t fall underneath any of the listed classes.31 57. What’s extra, DoD designated DJI with out warning, discover, or a possibility to be heard. Nor did DoD present DJI with any clarification of its determination. 30 See, e.g., Brandi Vincent, Pentagon’s checklist of Chinese language military-linked corporations working within the U.S. grows, DEF. WATCH (Oct. 6, 2022), https://tinyurl.com/mr36etuu; Kanishka Singh, U.S. widens funding ban to China’s BGI Genomics, drone maker DJI, REUTERS (Oct. 7, 2022), https://tinyurl.com/mry8y2hs; US places Chinese language drone big DJI on army ties blacklist, AL JAZEERA (Oct. 7, 2022), https://tinyurl.com/2y46yves. 31 Cf. Kania & Laskai, supra word 25 (noting that military-civil fusion is an aspirational coverage that seeks to copy, in China, “parallels in America’s personal protection innovation ecosystem”); ANNUAL REPORT TO CONGRESS: MILITARY AND SECURITY DEVELOPMENTS INVOLVING THE PEOPLE’S REPUBLIC OF CHINA (2023), supra word 27 (observing that the military-civil fusion technique depends on personal corporations for expertise improvement and procurement). Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 17 of 5
18 58. In Could 2023, DJI, via exterior counsel, contacted DoD to state that it was wrongly added to the CMC Listing and to ask for DoD’s rationale in including DJI in order that it may reply with specificity. DJI made a number of requests for a dialogue, however DoD declined to entertain even a cellphone name. 59. As an alternative, DoD indicated by e mail that DJI ought to “articulate the rationale for why the statutory standards don’t apply to DJI” and supply any extra data supporting DJI’s elimination from the CMC Listing. 60. On July 27, 2023, DJI submitted a petition to DoD searching for the elimination of DJI from the CMC Listing. Req. to Take away SZ DJI Tech. Co., Ltd. from the CMC Listing, connected hereto as Exhibit A; see additionally Sec. 1260H(b) (the Secretary of Protection “shall make additions or deletions” to the CMC Listing “on an ongoing foundation based mostly on the newest data accessible”). DJI’s delisting petition demonstrated why the Part 1260H designation standards don’t apply, enumerated the dangerous influence that DJI’s designation has had on the corporate and on U.S. stakeholders, and requested the designation’s administrative document. 61. On September 28, 2023, DJI requested a gathering to debate the petition and likewise once more requested a replica of the executive document. DoD didn’t reply to the request for a gathering and acknowledged that DJI would wish to submit a Freedom of Data Act (“FOIA”) request to acquire the executive document. 62. DJI promptly filed a FOIA request on October 18, 2023. DoD set December 15, 2023 because the date by which it anticipated to reply to DJI’s FOIA request, however DoD missed that deadline. It subsequent projected that it might produce the document by July 19, 2024. DoD once more missed that date, and revised its goal date to November 25, 2024. Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 18 of 56
19 63. DoD’s unwillingness to interact with DJI concerning the causes for its designation contrasts sharply with the strategy taken by different departments of the U.S. authorities. The Treasury Division’s OFAC, for instance, will usually present a sanctioned celebration with the executive document with out requiring that the celebration proceed via a prolonged FOIA course of. OFAC has repeatedly emphasised that the “energy and integrity” of sanctions derive not solely from the power to designate people and entities, but additionally from OFAC’s willingness to take away individuals from its sanctions lists the place circumstances warrant. 32 In distinction, DoD has no ample course of to permit a delegated celebration to grasp the explanations for its designation and to deal with the celebration’s request for delisting. G. DoD Redesignates DJI to the CMC Listing, Once more with out Any Discover or Rationalization 64. On January 31, 2024, DoD redesignated DJI as a CMC, however DJI’s complete petition detailing the explanations that the statutory standards don’t apply.33 65. Once more, DoD offered DJI no clarification for the redesignation, nor did it present any warning, discover, or alternative to be heard. 66. DJI filed a second FOIA request on March 27, 2024, searching for, amongst different issues, the executive document pertaining to DJI’s redesignation. DoD has but to provide any paperwork conscious of DJI’s FOIA request. 32 Submitting a Petition for Elimination from an OFAC Listing, OFAC, https://tinyurl.com/wvrm5nsv (final visited Oct. 17, 2024). Treasury additional states: “The final word purpose of sanctions is to not punish, however to carry a few optimistic change in habits. Annually, OFAC removes lots of of people and entities from the SDN Listing. . . . Sustaining the integrity of U.S. sanctions is a excessive precedence for OFAC and is the driving precept behind its rigorous overview course of that evaluates each request for elimination individually on its deserves and applies constant requirements to all of them.” Id. 33 See DOD Releases Listing of Individuals’s Republic of China (PRC) Army Firms in Accordance With Part 1260H of the Nationwide Protection Authorization Act for Fiscal 12 months 2021, DEP’T OF DEF. (Jan. 31, 2024), https://tinyurl.com/2t4phyc8. Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 19 of 56
20 67. On September 6, 2024, DJI, via exterior counsel, despatched a letter to DoD stating that, whereas DJI sought to interact with DoD in good religion for greater than 16 months, DoD’s failure to meaningfully have interaction with DJI, and its refusal to offer any rationale for DJI’s designation, left DJI with no affordable selection however to pursue reduction in federal courtroom absent DoD’s voluntary elimination of DJI. 68. 4 days in a while September 10, 2024, the Assistant Secretary of Protection for Industrial Base Coverage lastly offered a “courtesy copy” of a 26-page report, dated November 29, 2023 (the “Report”), detailing the rationale for DoD’s determination to redesignate DJI on January 31, 2024. There isn’t any legitimate clarification for DoD’s failure to offer the Report months earlier. However the purpose for DoD’s reluctance is obvious: the Report is replete with errors and wholly fails to adduce proof that DJI satisfies the statutory standards for inclusion on the CMC Listing. 69. Additionally, for the primary time in additional than 16 months, DoD agreed to DJI’s request to debate the designation.34 Though DJI knowledgeable DoD that the Report had a number of deficiencies, DoD declined to take away DJI from the CMC Listing. This lawsuit adopted. H. DoD’s Report Does Not Help Designating DJI as a CMC 70. DoD’s Report suffers from plenty of deficiencies. It applies the incorrect authorized customary, makes plenty of factual errors, and engages in strained, attenuated reasoning. The Report additionally improperly depends on outdated claims—from way back to six years earlier than the Report—that don’t converse to the related concern of whether or not DJI at present 34 The Assistant Secretary acknowledged in her September 10, 2024 e mail that whereas her “workers stays able to schedule a mutually handy assembly,” “[DJI’s or undersigned counsel’s] workers has not tried to schedule a gathering regardless of the Division’s continuous affords in our prior communications to satisfy . . . .” As proven above, this assertion was incorrect and DoD had ignored a number of requests by DJI to satisfy to debate this matter. Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 20 of 56
21 meets the statutory standards. See Sec. 1260H(a), (b)(3) (CMC designation should be “based mostly on the newest data accessible” and DoD is required to make “deletions to the newest checklist . . . on an ongoing foundation based mostly on the newest data accessible”). Remarkably, the Report additionally fails to say—not to mention tackle—DJI’s delisting petition filed on July 27, 2023, which offered details about DJI’s enterprise and possession construction and established why not one of the statutory standards apply to it.35 71. Every of the purported bases for DJI’s designation described within the Report is invalid. 1. DJI Is Not Owned by the Individuals’s Liberation Military or the Central Army Fee 72. DoD first asserts that DJI is a CMC underneath Part 1260H as a result of it’s “not directly owned by the Chinese language Communist Celebration (CCP).” Report at 6. Right here, the Report merely applies the incorrect authorized customary. Part 1260H permits the designation of an organization whether it is “straight or not directly owned, managed or beneficially owned by . . . the Individuals’s Liberation Military or another group subordinate to the Central Army Fee of the Chinese language Communist Celebration.” Sec. 1260H(D)(1)(B)(i) (emphases added). The PLA is China’s army, and the Central Army Fee is a department of the CCP that administers the PLA.36 The PLA and the Central Army Fee will not be interchangeable with the CCP itself. 35 Throughout a convention name with DJI’s exterior counsel on September 23, 2024, DoD represented that the Report (together with the sources cited in its endnotes) constitutes the complete foundation supporting DJI’s January 2024 designation. 36 Individuals’s Liberation Military, BRITTANICA, https://tinyurl.com/3vh8sun6 (final up to date Oct. 16, 2024); Central Army Fee (CMC), MIN. OF NAT. DEF., https://tinyurl.com/38nnwcwvError! Hyperlink reference not legitimate. (final visited Oct. 17, 2024); The Current State, Construction and Operation of Celebration Organizations, INST. OF PARTY BUILDING OF THE ORG. DEP. OF THE CENT. COMM. OF THE COMMUNIST PARTY OF CHINA, https://tinyurl.com/mu6v62bn (final visited Oct. 17, 2024). Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 21 of 56
22 73. The Report doesn’t discover that DJI is “straight or not directly owned, managed, or beneficially owned” by the PLA or another group subordinate to the Central Army Fee, which is required for an organization to be designated as a CMC underneath Part (d)(1)(B)(i)(I). 74. Nor may DoD have made such a discovering. As famous above, DJI is privately held. CEO Frank Wang, Henry Lu, Swift Xie, and Li Zexiang collectively maintain 87.4% of the corporate’s shares and 99% of voting rights. None of them is a member of, or has any affiliation with, the PLA or the Central Army Fee. Additional, not one of the remaining buyers—that are predominantly within the personal sector—is owned or managed by the PLA or the Central Army Fee. Due to this fact, DJI will not be owned or managed by the PLA or the Central Army Fee, and doesn’t qualify as a CMC underneath Part 1260H(D)(1)(B)(i)(I). 75. Though the Report’s allegation that DJI is “not directly owned by the CCP” is irrelevant to Part 1260H(D)(1)(B)(i)’s customary, that allegation is fake and unsupported by the purported details cited within the Report. The one proof offered by the Report pertains to sure minority investments in DJI made by two state-owned funding funds: Shanghai Free Commerce Zone Fairness Fund (the “Shanghai Fund”) and the Chengtong Fund Administration Co., Ltd (the “Chengtong Fund”). Report at 6. 76. The Chengtong Fund had ceased to be an investor in DJI as of June 2023, and subsequently nothing involving this fund can assist DJI’s redesignation on January 31, 2024. 77. The Shanghai Fund owns lower than 1% of DJI’s shares and fewer than 0.1% of DJI’s voting rights. Even when the Shanghai Fund had been partially owned by the CCP— Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 22 of 56
23 which the Report doesn’t set up—the Shanghai Fund’s minority funding in DJI is inadequate to ascertain “possession” underneath Part 1260H. Whereas DoD fails to articulate any customary for “possession” underneath the statute, see ACA Int’l v. FCC, 885 F.3d 687, 700 (D.C. Cir. 2018) (noting that company motion is “arbitrary and capricious if it fails to articulate a understandable customary” (quotation omitted)), within the analogous sanctions context, the Division of the Treasury’s OFAC has constantly utilized the “50 P.c Rule.” Below this rule, an entity that’s 50% or extra owned by a sanctioned entity is taken into account sanctioned as effectively.37 As a result of the Shanghai Fund’s possession curiosity is greater than 50 instances beneath that threshold, the Report doesn’t set up DJI’s oblique possession by any entity—not the CCP, and positively not the PLA or the Central Army Fee. 38 78. Thus, DoD fails to display that DJI is owned or managed by the PLA or any group subordinate to the Central Army Fee, as required underneath Part 1260H(D)(1)(B)(i). 2. DJI Is Not a Army-Civil Fusion Contributor to the Protection Industrial Base 79. Subsequent, the Report claims that DJI is a CMC as a result of it’s “a military-civil fusion contributor to the protection industrial base.” Report at 7-16. Part 1260H(d)(2) 37 See Entities Owned by Blocked Individuals (50% Rule), OFAC, https://tinyurl.com/hw45rewy (final visited Oct. 17, 2024). As utilized to Iran, for instance, blocked individuals are deemed to “have an curiosity in all property and pursuits in property of an entity through which such individuals straight or not directly personal, whether or not individually or within the combination, a 50 % or better curiosity.” 31 C.F.R. § 560.425(a) (2022). 38 The Shanghai Fund’s portfolio corporations embrace, for instance, Pagoda (fruit retail and provide chain firm), United Imaging (producer of medical imaging and radiotherapy tools), and SF Specific (a supply service). See Shanghai FTZ Fund, https://tinyurl.com/2v3m2tnt (final visited Oct. 17, 2024). By DoD’s misguided logic, all of those corporations would qualify as a CMC as a result of they’re not directly owned by the CCP. Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 23 of 56
24 defines “military-civil fusion contributor” when it comes to eight classes. The Report makes no allegations about 4 of the eight. However with respect to the remaining 4 classes, the Report commits plenty of factual and authorized errors, together with, as above, failing to “articulate a understandable customary for assessing the applicability of [the] statutory categor[ies].” ACA Int’l, 885 F.3d at 700 (quotation and citation omitted). The Report falls far in need of proving that DJI qualifies underneath any class. (a) Class 1: “Entities knowingly receiving help from the Authorities of China or the Chinese language Communist Celebration via science and expertise efforts initiated underneath the Chinese language army industrial planning equipment.” 80. The primary class of a “military-civil fusion contributor” is an entity that’s “knowingly receiving help from the Authorities of China or the Chinese language Communist Celebration via science and expertise efforts initiated underneath the Chinese language army industrial planning equipment.” The Report erroneously claims that DJI satisfies this class as a result of it allegedly has an “established relationship with military-affiliated analysis establishments within the PRC,” specifically, the Academy of Army Science, the Nationwide Protection College, and the Nationwide College of Protection Expertise. Report at 7. The conduct alleged within the Report doesn’t give rise to an “established relationship” with any of those universities, a lot much less one which might be described as DJI “knowingly receiving help from the Authorities of China or the CCP via science and expertise efforts initiated underneath the Chinese language army industrial planning equipment.” Sec. 1260H(d)(2)(A). (i) Alleged relationship with the Nationwide Protection College 81. The Report doesn’t make any allegations or cite any proof concerning a purported relationship between DJI and the Nationwide Protection College. Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 24 of 56
25 (ii) Alleged relationship with the Army Science Academy 82. The Report alleges that the Army Science Academy “used DJI drones, such because the DJI Livox solid-state LiDAR, to develop and patent a three-dimensional temperature measuring gadget with multi-sensor fusion (patent CN114061763A).” Report at 7 (emphasis added). As an preliminary matter, this displays an error. The patent states that it used a Livox “radar,” not a drone;39 furthermore, Livox will not be a DJI-branded product, however is offered by a DJI affiliate. 83. DJI has no management over whether or not a analysis college purchases and makes use of an off-the-shelf40 DJI product—not to mention a product offered by its affiliate—within the improvement of a patent utility (CN114061763A). Such use under no circumstances demonstrates a relationship, a lot much less an “established relationship,” between DJI and the Army Science Academy. The patent utility at concern additionally refers to the usage of an “Nvid[i]a Jetson Nano edge computing board” and a “SONY IMX477 low-light digicam module.” 41 If utilizing an off-theshelf product in a patent utility can function the idea for designation, then Nvidia (an American firm) and Sony (a Japanese firm) would additionally qualify as CMCs. 42 Furthermore, DJI merchandise have been incessantly utilized by researchers, together with these from the U.S. Air Drive. 43 DoD’s logic would result in the conclusion that DJI can be an “American army firm.” 39 Invention Patent Software: CN114061763A (printed Feb. 18, 2022), https://tinyurl.com/3crwzj7p. 40 See, e.g., Livox Mid-70 LiDAR, AMAZON, https://tinyurl.com/4n9j64uz (final visited Oct. 17, 2024). 41 Supra word 39. 42 Part 1260H doesn’t require that an organization be registered or domiciled in China to represent a “Chinese language Army Firm.” 43 U.S. No. 11,569,871B2 (granted Jan. 31, 2023), https://tinyurl.com/5n6eaycj (“The invention was additionally demonstrated with two DJI drones to see how they dealt with interference with one another.”). Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 25 of 56
26 84. In any occasion, DoD’s allegation {that a} analysis college used an off-theshelf product offered by an affiliate to develop a patent under no circumstances establishes that DJI is “knowingly receiving help” from the Chinese language authorities or CCP, as required by the statute. Sec. 1260H(d)(2)(A) (emphasis added). In reality, that doesn’t set up DJI’s understanding receipt of help of any type. 85. As well as, patent utility CN114061763A was printed in February 2022, and subsequently has little bearing on whether or not DJI “knowingly receiv[ed] help” from the Chinese language authorities or CCP on the time of the January 2024 redesignation. 86. The Report additionally alleges that “Zhang Tao” (张涛), who’s cited as an inventor for patent utility CN114061763A, can be cited as an inventor for DJI patent functions WO2021146875A1 44 and WO2021253247A1. 45 The Report doesn’t elaborate, however means that this additionally demonstrates an “established relationship” between DJI and the Army Science Academy. Nonetheless, DoD’s details are merely incorrect: the “Zhang Tao” cited in patent utility CN114061763A will not be the “Zhang Tao” cited within the DJI patent functions. 87. The Zhang Tao cited within the DJI patent functions was a software program testing engineer at DJI from January 2018 to June 2021. Zhang Tao Decl. ¶ 1, connected hereto as Exhibit B. Mr. Zhang has no reference to the Army Science Academy and was not concerned in patent utility CN114061763A. Id. ¶ 7. 88. This coincidence is unsurprising on condition that “Zhang Tao” is a typical Chinese language title, as DoD ought to have appreciated. A search on Google Patents for “Zhang 44 WO2021146875A1 (filed Jan. 20, 2020), https://tinyurl.com/y9hdan32. 45 WO2021253247A1 (filed June 16, 2020), https://tinyurl.com/3tkcw9v5. Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 26 of 56
27 Tao” as an inventor yields over 100,000 outcomes. 46 Having workers with widespread Chinese language names will not be a foundation for itemizing underneath Part 1260H.47 (iii) Alleged relationship with the Nationwide College of Protection Expertise 89. The Report additionally alleges that the Nationwide College of Protection Expertise used DJI drones to develop and patent sure innovations, together with CN112344798B48 and CN115330876B.49 Report at 7. As mentioned above, the mere use of off-the-shelf DJI merchandise in patent improvement doesn’t give rise to an “established relationship” between DJI and the college, or to understanding receipt of help from the Chinese language authorities or the CCP. 90. Right here, once more, the Report conflates two totally different folks. The Report incorrectly claims that the “Zheng Wei” ( 郑 伟 ) 50 cited as an inventor for patent CN112344798B can be an inventor for a DJI patent utility WO2022126415A1.51 Report at 8. Whereas the “Zheng Wei” cited in patent CN112344798B seems to be a professor on the Nationwide College of Protection Expertise, 52 the “Zheng Wei” cited in DJI patent utility WO2022126415A1 is a software program engineer at Xi’an DJI Expertise Co., Ltd. (“Xi’an DJI”). Zheng Wei Decl. ¶¶ 1, 3, connected hereto as Exhibit C. Xi’an 46 Inventor: “Zhang Tao” (“张涛”), Google Patents, https://tinyurl.com/ua973mwy (final visited Oct. 17, 2024). 47 Cf. Angela Yang, From crime victims to politicians, misidentifying Asians is a part of America’s racist historical past, NBC NEWS (Mar. 1, 2022), https://tinyurl.com/4tw6z7dc. 48 CN112344798B (granted Dec. 30, 2022), https://tinyurl.com/y3ftkwzp. 49 CN115330876B (granted Apr. 7, 2023), https://tinyurl.com/mrytk3n9. 50 Pursuant to Chinese language naming conference which locations an individual’s household title first, we now have written 郑伟 as Zheng Wei as an alternative of Wei Zheng. 51 WO2022126415A1 (printed June 23, 2022), https://tinyurl.com/5yhr8nct. 52 Wei Zheng, IEEE XPLORE, https://tinyurl.com/bdde5576 (final visited Oct. 17, 2024). Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 27 of 56
28 DJI’s Zheng Wei has no connection to the Nationwide College of Protection Expertise and was not concerned within the patent utility CN112344798B. Id. ¶ 4. Once more, this coincidence is unsurprising—a search on Google Patents for “Zheng Wei” as an inventor yields over 27,750 outcomes.53 91. Thus, the Report fails to display any “established relationship” between DJI and the aforementioned universities, or that DJI is “knowingly receiving help” from the Chinese language authorities or the CCP “via science and expertise efforts initiated underneath the Chinese language army industrial planning equipment.” (b) Class 2: “Entities affiliated with the Chinese language Ministry of Trade and Data Expertise (MIIT), together with analysis partnerships and initiatives.” 92. The second class of a “military-civil fusion contributor” is an entity that’s “affiliated with the [MIIT], together with analysis partnerships and initiatives.” The MIIT is a Chinese language authorities company that regulates a spread of merchandise, together with, for instance, dwelling home equipment, computer systems, shopper electronics, meals, textile, and drugs.54 53 Inventor: “Zheng Wei” (“郑伟”), Google Patents, https://tinyurl.com/yc2x496k (final visited Oct. 17, 2024). There additionally seems to be a “Zheng Wei” with the next patents or patent functions of Microsoft CN111753052A, CN304683437S, CN304672120S, CN304380401S, CN303755510S, CN303755497S, CN303670180S, CN303403677S, CN303368153S, CN303403653S, CN302937245S, CN302815128S, CN302289896S, CN302350747S. 54 Gongxinbu: Yi Gaozhiliang Gongji Yinling Daidong Jiadian Xiaofei (工信部：以高质量供给引 领带动家电消费) [Ministry of Industry and Information Technology: Driving Home Appliance Consumption with High-quality Supply], Zhengquan Shibao Guanfang Wangzhan (证券时报官方 网 站 ) [Securities Times Official Website] (Sept. 15, 2022), https://tinyurl.com/ypswvu2s; Gongxinbu Jiada Lidu Guifan Diannao PC Duan Yingyong Ruanjian Tanchuang Xinxi Xingwei (工 信部加大力度规范电脑 PC 端应用软件弹窗信息行为) [The Ministry of Industry and Information Technology has stepped up efforts to regulate pop-up information behaviors of PC application software], Zhongguo Ribao (中国日报) [China Daily] (Oct. 29, 2021), https://tinyurl.com/4t9spxru; Shipin Gongye Qiye Chengxin Tixi Jianshe (食品工业企业诚信体系建设) [Construction of integrity system for food industry enterprises], Gongye He Xinxihua Bu Zhengwu Fuwu Pingtai (工 业和信息化部政务服务平台) [Ministry of Industry and Information Technology Government Service Platform], https://tinyurl.com/3j6wze47 (final visited Oct. 17, 2024); Gongxinbu Yinfa Fangzhi Gongye Fazhan Guihua (工信部印发纺织工业发展规划) [The Ministry of Industry and Information Technology issued the textile industry development plan], Zhongguo Gongshang Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 28 of 56
29 93. The Report makes allegations associated to (1) DJI’s participation within the drafting of an {industry} customary, “Security Necessities for Civilian Unmanned Plane Techniques,” promulgated by the MIIT; (2) DJI’s receipt of an invite to talk at a convention/expo organized by the MIIT; (3) DJI’s receipt of a design award issued by the MIIT; and (4) a DJI “Practical Security Division Lead” serving concurrently as a professor at a college laboratory overseen by the Ministry of Science and Expertise (“MOST”) and as a subproject lead for an MIIT automotive-safety venture. Report at 8-9. 94. However none of those allegations set up the required affiliation between DJI and the MIIT underneath Part 1260H(d)(2)(B). To show affiliation underneath this Courtroom’s precedent, DoD should present that DJI is “successfully managed” by the MIIT, or not less than “related to” the MIIT “underneath widespread possession or management.” Xiaomi, 2021 WL 950144 at *7; Luokung, 538 F. Supp. 3d at 184-88 (identical). Furthermore, none of those allegations fulfill DoD’s most well-liked however incorrect definition of affiliation, which might require DJI to have a “widespread objective” and “shared traits” with, or be “intently related” with, the MIIT “in a dependent or subordinate place.”55 Most of those allegations additionally relate to occasions that transpired years in the past, and thus can’t function bases for DJI’s January 2024 redesignation. Yinhang (中国工商银行) [ICBC] (Sept. 29, 2016), https://tinyurl.com/5a5rxxnn; Gongxinbu: Peiyu Shijie Yiliu Yiyao Gongye Qiye Tuijin Yiyao Chuangxin Chanpin Chanyehua (工信部：培 育世界一流医药工业企业 推进医药创新产品产业化) [Ministry of Industry and Information Technology: Cultivate world-class pharmaceutical industry enterprises and promote the industrialization of innovative pharmaceutical products], Yangshiwang (央视网) [CCTV.com] (Sept. 3, 2023), https://tinyurl.com/ydpawrcn. 55 That is the usual DoD is advocating within the Hesai litigation, cf. Xiaomi, 2021 WL 950144 at *6, however the Report makes no point out of this customary. Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 29 of 56
30 (i) DJI’s participation in safety-standards drafting 95. As an preliminary matter, the “Security Necessities for Civilian Unmanned Plane Techniques” is plainly a security customary for civilian, not army, drones. Report at 8. As a result of taking part in drafting a civilian security customary will not be probative of being a “civil-military fusion contributor to the Chinese language protection industrial base,” DJI’s involvement with this security customary can’t fulfill the statutory standards. (Emphases added.) 96. DoD’s obvious place—that participation in any industry-standards drafting establishes the requisite affiliation between a non-public firm and the MIIT—is plainly incorrect. In the US, as in China, personal entities usually work with authorities businesses to develop security requirements. For instance, Microsoft works with the NIST and the Nationwide Cybersecurity Middle of Excellence (“NCCoE”) to promulgate requirements on privateness and cybersecurity.56 Below DoD’s misguided strategy, Microsoft could be “affiliated with” the NIST and NCCoE, and a military-civil fusion contributor to the American protection industrial base. 97. Furthermore, if non-military requirements drafting made an entity affiliated with the MITT and subsequently a CMC, plenty of main U.S. and worldwide corporations would qualify for the CMC Listing. For instance: o Nokia has participated within the drafting of 514 MIIT requirements for the communications sector; o Ericsson has participated within the drafting of 290 MIIT requirements for the communications sector; o Siemens has participated within the drafting of 188 MIIT requirements for sectors together with equipment, communications, and petrochemical; 56 See, e.g., How Microsoft and NIST are collaborating to advance the Zero Belief Implementation, MICROSOFT (Aug. 6, 2024), https://tinyurl.com/yrsya5ys. Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 30 of 56
31 o Samsung has participated within the drafting of 148 MIIT requirements for sectors together with communications and electronics; o Emerson has participated within the drafting of 108 MIIT requirements for sectors together with communications and equipment; o Qualcomm has participated within the drafting of 70 MIIT requirements for the communication sector; o Ford has participated within the drafting of 37 MIIT requirements for sectors together with automotive, mild {industry}, and nonferrous metals; o Volkswagen has participated within the drafting of 37 MIIT requirements for sectors together with equipment and automotive; o Intel has participated within the drafting of 17 MIIT requirements for the communications and electronics sectors; and o Procter & Gamble has participated within the drafting of 14 MIIT requirements for the sunshine {industry} sector.57 98. Accordingly, DJI’s participation in drafting one civilian customary doesn’t set up the mandatory affiliation between DJI and the MIIT for functions of qualifying DJI as a CMC. (ii) Invitation to a 2018 convention/expo 99. The Report asserts that, as a result of DJI acquired an invite to a 2018 world convention/expo organized by the MIIT, DJI should be affiliated with the MIIT. Report at 9. This declare fails at a number of ranges. First, the Report neglects to say that DJI by no means attended the occasion. 57 Extra examples embrace: Motorola: 61 MIIT requirements for sectors together with communications and electronics; Samsung Electronics: 30 MIIT requirements for sectors together with electronics, mild {industry}, and equipment; Epson: 15 MIIT requirements for sectors together with electronics and equipment; 3M: 14 MIIT requirements for sectors together with communications and light-weight {industry}; Honeywell: 10 MIIT requirements for sectors together with textiles, communications, chemical substances, mild {industry}, petrochemicals, and equipment; Unilever: 10 MIIT requirements for sectors together with mild {industry} and packaging; Normal Electrical: 9 MIIT requirements for sectors together with equipment and electronics; Philip: 9 MIIT requirements for sectors together with mild {industry} and electronics; Dupont: 8 MIIT customary for sectors together with electronics, constructing supplies, equipment, mild {industry}, and chemical; Colgate: 8 MIIT customary for the sunshine {industry} sector; HP: 7 MIIT requirements for the electronics sector; Rockwell Automation: 5 MIIT customary for the equipment sector; Goodyear Tire & Rubber: 4 MIIT requirements for the chemical sector; Eastman Chemical: 3 MIIT customary for sectors together with vehicle and chemical; Apple: 3 MIIT requirements for the electronics sector; AMD: 3 MIIT requirements for the electronics sector; Normal Motors: 2 MIIT requirements for sectors together with vehicle and electronics; Dell: 2 MIIT requirements for the electronics sector; Chevron: 1 MIIT customary for the equipment sector; Microsoft: 1 MIIT customary for the communications sector. See Hangye Biaozhun Chaxun ( 行 业 标 准 查 询 ) [Search for Industry Standards], https://tinyurl.com/yc635edc (final visited Oct. 17, 2024). Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 31 of 56
32 100. As well as, greater than 20 entities had been concerned in organizing the expo, together with international authorities businesses and analysis establishments such because the German Academy of Engineering, the Worldwide Society of Optical Engineering, the Dutch Expertise Entrepreneurs Affiliation, the Italian Ministry of Science and Expertise Innovation, the British Institute of Engineering and Expertise, and the Australian Division of Industrial Innovation and Science.58 It’s implausible that DJI is affiliated with all of these establishments just because it acquired an invite to take part within the occasion. 101. As well as, the expo occurred in 2018 and is subsequently not probative of any relationship between DJI and the MIIT on the time of the January 2024 redesignation. (iii) Receipt of a 2020 award 102. The Report additionally depends on DJI’s receipt of an award to display an alleged affiliation with the MIIT. Report at 9. In 2020, DJI was one in every of 10 winners of the China Wonderful Industrial Design Award (“CEID”) issued by the MIIT. Id. The Report asserts that DJI is affiliated with the MIIT as a result of these awards “had been beforehand given to civilian, dual-use, and army applied sciences.” Id. As an preliminary matter, the mere receipt of an award is inadequate to ascertain an affiliation between DJI and the MIIT. See Xiaomi, 2021 WL 950144 at *8 (discovering the Xiaomi CEO’s receipt of an award issued by the MIIT inadequate to assist Xiaomi’s designation). 103. Furthermore, the Report’s characterization of the CEID award is wrong and deceptive. The CEID award has traditionally been issued to corporations throughout a variety 58 2018 Quanqiu Zhineng Gongye Dahui Ji Quanqiu Chuangxin Jishu Chengguo Zhuanyi Dahui Ji Bolan (2018 全球智能工业大会暨 全球创新技术成果转移大会暨博览) [2018 Global Intelligent Industry Conference and Global Innovation Technology Transfer Achievements Conference and Expo], Wurenji Wang (无人机网) [YOUAV.COM] (Could 23, 2018), https://tinyurl.com/2ract3sr. Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 32 of 56
33 of industries for merchandise with no obvious army functions. For instance, the award has been issued to POCKIT (child strollers),59 Casarte (washing machines),60 Xiao Mi (water filters),61 Nice Wall (SUVs),62 Taishan (body-measurement machines),63 United Imaging (PET-CT scanners), 64 and Bosideng (puffy jackets). 65 Additionally, the award standards cited by the Report don’t relate to army functions; the important thing standards are “being a forerunner, innovativeness, practicality, aesthetic impact, ergonomics, high quality, consideration given to environmental safety and financial system.” Report at 10. Critically, the Report itself notes the dearth of any standards involving “direct analysis collaboration with MIIT.” Id. 104. As well as, DJI was given the award in 2020 and it’s thus irrelevant to the query of whether or not DJI was affiliated with the MIIT on the time of the January 2024 redesignation. (iv) College professor serving as guide to DJI 105. Lastly, the Report claims that DJI is affiliated with the MIIT as a result of a professor at a college laboratory additionally works for DJI, and the professor had, up to now, additionally led a analysis venture for the MIIT. Report at 10. 59 2016 Nian Jinjiang Zuopin (2016 年金奖作品) [2016 Winners of the CEID Award], Baidu (百度) [Baidu], https://tinyurl.com/96nj3mam (final up to date Apr. 12, 2022). 60 Id. 61 Id. 62 2018 Nian Jinjiang Zuopin (2018 年金奖作品) [2018 Winners of the CEID Award] Baidu (百度) [Baidu], https://tinyurl.com/2wcmsaa3 (final up to date Apr. 12, 2022). 63 Id. 64 Supra word 59. 65 10 winners introduced for China Wonderful Industrial Design Award, WONDERLAND YANTAI (Nov. 26, 2020), https://tinyurl.com/mv356hpc. Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 33 of 56
34 106. Particularly, the Report asserts that Affiliate Professor Zhang Yuxin at Jilin College (“JLU”), who works in JLU’s State Key Laboratory of Automotive Simulation (the “Laboratory”), can be a “Practical Security Division Lead” for DJI, and holds a number of patents that had been assigned to each DJI and JLU.66 Id. The Report additional alleges that from October 2020 to October 2022, whereas he was working for DJI, Professor Zhang additionally served as a Subproject Chief for an automotive security venture funded by the MIIT. Id. 107. None of those allegations set up the mandatory affiliation between DJI and the MIIT. As an preliminary matter, Professor Zhang has suggested plenty of personal corporations on questions of safety associated to automated driving methods. For a number of years, he has served as an out of doors automotive security guide—not for DJI, however for a DJI affiliate known as SZ Zhuoyu Expertise Co., Ltd. (“Zhuoyu”). Zhang Yuxin Decl. ¶ 1, connected hereto as Exhibit D. Lecturers incessantly maintain positions in each the personal and public sectors. It will be nonsensical to counsel that Bloomberg, for instance, has an affiliation with DoD as a result of Harvard Professor Cass Sunstein labored for Bloomberg concurrently with advising DoD. 67 66 The Report claims that JLU is overseen by the Ministry of Science and Expertise (“MOST”), however supplies no proof for that assertion. Report at 10. The Report’s cited supply solely states that the Laboratory handed the nationwide key laboratory analysis organized by the MOST in 2003 and 2008; it doesn’t state that the Laboratory was overseen by the Ministry. See Shiyanshi Jianjie (实验室 简介) [Laboratory Introduction], Jilin Daxue Qiche Fangzhen Yu Kongzhi Guojia Zhongdian Shiyanshi (吉林大学汽车仿真与控制国家重点实验室) [JLU State Key Laboratory of Automotive Simulation and Control], https://tinyurl.com/55ava6ve (final visited Oct. 17, 2024). In any case, MOST is a separate company from the MIIT. 67 Cass R. Sunstein: Curriculum Vitae, HARVARD UNIV., https://tinyurl.com/3akjx9um (final visited Oct. 17, 2024) (noting that Sunstein served on the Protection Innovation Board of the U.S. Division of Protection from 2016 to 2017); Govt Department Personnel Public Monetary Disclosure Report (OGE Kind 278e), Cass Sunstein, https://tinyurl.com/3b65mbje (final visited Oct. 17, 2024) (noting that Sunstein labored for Bloomberg from 2013 to 2021). Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 34 of 56
35 108. Furthermore, the MIIT analysis venture at concern—titled “Development and Security Evaluation of SOTIF Situations of Automated Driving Techniques of Passenger Vehicles”—assessed the security of automated driving methods for passenger automobiles; it was not associated to any army or protection functions. Zhang Yuxin Decl. ¶ 5. And most significantly, neither Zhuoyu nor DJI performed any half on this venture. Id. ¶ 6. In reality, Professor Zhang is prohibited from disclosing the main points of this venture to any third celebration, together with Zhuoyu and DJI. Id. 109. As well as, the MIIT venture concluded in October 2022, and is subsequently irrelevant to DJI’s relationship with the MIIT as of the January 2024 redesignation. (c) Class 3: “Entities receiving help, operational route or coverage steering from the State Administration for Science, Expertise and Trade for Nationwide Protection.” 110. The third class of a “military-civil fusion contributor” is an entity that’s “receiving help, operational route or coverage steering from the State Administration for Science, Expertise and Trade for Nationwide Protection [“SASTIND”],” a authorities company answerable for industrial planning and regulatory points of the defense-industry base.68 Thus, this class captures corporations that obtain assist from SASTIND as a part of its efforts to foster military-civil fusion and enhance the defenseindustry base. 111. The Report, nonetheless, doesn’t declare that SASTIND helps DJI as a part of SASTIND’s military-civil fusion efforts. Fairly, the Report alleges that DJI falls inside this class for 2 causes: (1) DJI is topic to export restrictions on civilian drones— 68 JAMES MULVENON & REBECCA SAMM TYROLER-COOPER, CHINA’S DEFENSE INDUSTRY ON THE PATH OF REFORM, Report Ready for the U.S.-China Financial and Safety Evaluate Comm’n (Oct. 2009), https://tinyurl.com/dnbey5ym. Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 35 of 56
36 collectively issued by the Chinese language Ministry of Commerce, Normal Administration of Customs, SASTIND, and the Gear Growth Division of the Central Army Fee—to forestall the usage of these drones within the Russia-Ukraine battle; and (2) 61 patents are collectively held by DJI and 4 prime universities in China, that are alleged by the Report back to have connections to SASTIND by advantage of their participation in protection analysis. Report at 11-12. The cited proof doesn’t set up the requisite relationship between DJI and SASTIND. (i) Export restrictions 112. The Report claims that DJI “acquired help, operational route or coverage steering” from SASTIND just because SASTIND, along with three different regulatory businesses, issued export restrictions on long-range civilian drones to forestall their unintended army use within the Russia-Ukraine battle. Report at 11. Nonetheless, because the Report itself notes, the restrictions will not be focused at DJI; they apply to all drones exported from China that meet sure standards for weight and flight distance or period. Id. Furthermore, underneath the restrictions, an organization searching for to export lined drones should apply to the Ministry of Commerce, not SASTIND, for permission. Id. 113. Being topic to usually relevant export restrictions will not be “receiving help, operational route or coverage steering” from a authorities company, a lot much less serving as a “military-civil fusion contributor.” In any other case, by the Report’s logic, each U.S. farmer could be “receiving help, operational route or coverage steering” from the U.S. Division of Agriculture, and each publicly traded firm could be “receiving help, operational route or coverage steering” from the U.S. Securities and Alternate Fee. Furthermore, it might be unusual to justify DJI’s designation as a CMC on the truth that it adhered to a restriction in opposition to the army use of drones. DoD Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 36 of 56
37 has positioned DJI in a Catch-22: complying with the restrictions would allegedly assist its designation as a CMC, however not complying with the restrictions would result in the potential misuse of its drones within the Russia-Ukraine battle. (ii) Joint patents with universities 114. The Report additional claims that DJI “acquired help, operational route or coverage steering” from SASTIND as a result of DJI owns 61 patents with 4 prime universities in China—JLU, Tsinghua College, Peking College (“PKU”), and Zhejiang College (ZJH)—and these universities have performed defense-related analysis. Report at 12-15.69 This attenuated reasoning doesn’t fulfill the statutory customary, and the Report itself admits that it has failed to ascertain “a direct relationship between DJI and SASTIND.”70 Report at 12. 115. Even when these universities had a relationship with SASTIND by advantage of defense-related analysis collaborations, this doesn’t converse to the connection between DJI and SASTIND in any respect. The Report doesn’t allege that any of the 61 patent functions at concern had been a part of any analysis collaboration with SASTIND or that these patent functions are even associated to army or protection functions. In reality, a overview of the publicly accessible patent information present that not one of the 61 patent functions have any obvious army or protection functions. 71 69 These universities are the equal of Harvard, Stanford, Yale, and MIT in the US. 70 Footnote 62 of the Report notes that each one universities in China are administered by the Ministry of Schooling. This doesn’t imply that each one universities are linked to SASTIND, a totally totally different ministry. In reality, the footnote additional acknowledges that though some universities seem like straight administered by the MIIT, none of them appeared in DJI’s patents. 71 Furthermore, not one of the 61 patent functions at concern include phrases equivalent to “军” (army, military) “国防” (protection) “武” (arm, pressure, battle), or “战斗” (fight). Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 37 of 56
38 116. Furthermore, these patent functions had been filed between 2018 and 2022, years earlier than the January 2024 redesignation. Due to this fact, the Report fails to current any proof establishing a relationship between DJI and SASTIND as of January 2024, nor does it show that DJI is receiving “help, operational route or coverage steering” from SASTIND. 117. As well as, the 4 Chinese language universities at concern have joint patents and/or collaboration agreements with U.S. authorities businesses, U.S. universities, and/or numerous worldwide corporations.72 Based on the Report’s flawed logic, the U.S. Division of Well being and Human Companies, the Nationwide Institute of Well being Workplace of Expertise Switch, the College of Maryland, Panasonic, Stanford College, Eaton Company, the College of Texas, Fuji Electrical, Sony, Intel, and Mercedes-Benz would all 72 For instance, JLU holds three patent functions with the U.S. Division of Well being and Human Companies, the Nationwide Institute of Well being Workplace of Expertise Switch, and the College of Maryland. See WO2008091375A2 (printed July 31, 2008), https://tinyurl.com/nhjtsb4y; WO2008091375A9 (printed Sept. 18, 2008), https://tinyurl.com/59hxnx5h; WO2008091375A3 (printed July 31, 2008), https://tinyurl.com/52uhpvzz. JLU additionally has a patent utility with Normal Motors. See WO2007008363A3 (printed Mar. 15, 2007), https://tinyurl.com/4av2c7jp. Peking College (“PKU”) holds plenty of patents and/or patent functions with the Panasonic Company and hosts the “Stanford Middle at Peking College.” See JPH01277963A (printed Nov. 8, 1989), https://tinyurl.com/yx92ekth; JPH01277962A (printed Nov. 8, 1989), https://tinyurl.com/u9f58xtb; JPS62182868A (printed Aug. 11, 1987), https://tinyurl.com/yckb7ab5; JPH01255067A (printed Oct. 11, 1989), https://tinyurl.com/4rzwd7x8; JPS62182965A (printed Aug. 11, 1987), https://tinyurl.com/2f645c4j; Stanford Middle at Peking College Residence Web page, https://tinyurl.com/bde29k9h (final visited Oct. 16, 2024). Zhejiang College holds patent functions with the Eaton Company, see WO2017106136A1 (printed June 22, 2017), https://tinyurl.com/5h2xersd, the College of Texas, see WO2017132816A1 (printed Aug. 10, 2017), https://tinyurl.com/2vrjw4me, and Fuji Electrical, see WO2008101367A1 (printed Aug. 28, 2008), https://tinyurl.com/44u5673m. Tsinghua College has 18 patents and/or patent functions with Sony, see, e.g., CN104052553A (printed Sept. 17, 2014), https://tinyurl.com/mr4y7bxb; CN108738067A (printed Nov. 2, 2018), https://tinyurl.com/ybuxm6bc; CN103716886A (printed Apr. 9, 2014), https://tinyurl.com/5c46xvy5, a patent utility with Intel, see CN118434071A (printed Aug. 2, 2024), https://tinyurl.com/bdzezyxj, in addition to an ongoing analysis collaboration with MercedesBenz associated to clever transportation, clever automobiles, and sustainable improvement. Qiye Hezuo (企业合作) [Enterprise Cooperation], Qinghua Daxue (清华大学) [Tsinghua University], https://tinyurl.com/ymx9wnma (final visited Oct. 16, 2024). Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 38 of 56
39 presumably be “receiving help, operational route or coverage steering” from SASTIND and would qualify as CMCs. 118. Accordingly, the Report has failed to ascertain that DJI is “receiving help, operational route or coverage steering from” SASTIND. (d) Class 4: “Any entities or subsidiaries outlined as a ‘protection enterprise” by the State Council of the Individuals’s Republic of China.” 119. The fourth class of a “military-civil fusion contributor” is an entity that’s “outlined as a ‘protection enterprise’ by the State Council of the Individuals’s Republic of China.” The Report makes no allegations about DJI underneath this class. (e) Class 5: “Entities residing in or affiliated with a military-civil fusion enterprise zone or receiving help from the Authorities of China via such enterprise zone.” 120. The fifth class of a “military-civil fusion contributor” is an entity that’s “residing in or affiliated with a military-civil fusion enterprise zone or receiving help from the Authorities of China via such enterprise zone.” The Report claims that DJI satisfies this class as a result of it was planning to construct an Innovation Middle and International Technical Help Middle within the Xi’an Excessive-Tech Industrial Growth Zone (西安高 新技术产业开发区) (the “Xi’an Excessive Tech Zone”), which it claims is a military-civil fusion enterprise zone. Report at 15. The Report additional claims that the Xi’an Excessive Tech Zone is often known as Xi’an Financial and Technological Growth Zone (西安经济技术开发区). Id. 121. As an preliminary matter, the Xi’an Excessive Tech Zone will not be the Xi’an Financial and Technological Growth Zone. A fast Google search in both English or Chinese language reveals that these two zones are fully totally different entities regardless of beginning with the phrase Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 39 of 56
40 “Xi’an,” which is a metropolis in China.73 DJI has no connection to, or presence in, the Xi’an Financial and Technological Growth Zone. 122. DJI at present rents workplace house within the Xi’an Excessive Tech Zone. Opposite to the Report’s assertion, the Xi’an Excessive Tech Zone will not be a military-civil fusion enterprise zone. 123. The Xi’an Excessive Tech Zone was established by the Xi’an municipal authorities in 1991 to advertise the event of high-tech industries within the northwestern area of China. 74 Spanning roughly 155 sq. kilometers, the zone helps a variety of economic and non-profit initiatives, together with malls, parks, residences, and elderly-care facilities. 75 124. The presence of main U.S. and different worldwide corporations within the zone demonstrates that the Xi’an Excessive Tech Zone will not be a “military-civil fusion enterprise zone.” The zone is dwelling to over 100 U.S. and worldwide Fortune 500 corporations, equivalent to IBM (U.S.), Johnson & Johnson (U.S.), GE (U.S.), Utilized Supplies (U.S.), Micron (U.S.), Intel (U.S.), Sybase (U.S.), Vishay (U.S.), Infineon (Germany), Samsung (South Korea), NEC (Japan), and Fujitsu (Japan).76 125. Given its sheer measurement, the Xi’an Excessive Tech Zone is split into subzones or 73 Xi’an Financial and Technological Growth Zone, CHINA DAILY (final up to date Could 21, 2019) https://tinyurl.com/4pttmyuw. 74 Xi’an Excessive Tech Industries Growth Zone, AMCHAM SHANGHAI, https://tinyurl.com/5bjx2uhh (final visited Oct. 17, 2024). 75 Supra word 74; Xi’an Excessive-tech Zone signed initiatives at Silk Street expo, CHINA DAILY (final up to date Could 16, 2018), https://tinyurl.com/yc2yd3te. 76 Supra word 74; Xian Gaoxin Jishu Chanye Kaifa Qu (西安高新技术产业开发区) [Xi’an High-tech Industrial Development Zone], Shanxisheng Difangzhi Bangongshi (陕西省地方志办公室) [Shaanxi Province Local Office], https://tinyurl.com/44j6b5yc (final visited Oct. 17, 2024); see additionally Cao Yingying, Utilized Supplies Helps Mega Metropolis’s Progress, CHINA DAILY https://tinyurl.com/yb6j5nyy; Yuan Shenggao, Xi’an high-tech zone fosters huge progress and employment, CHINA DAILY (Mar. 30, 2021), https://tinyurl.com/39ff74sr. Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 40 of 56
41 clusters by {industry}, and DJI’s subzone will not be associated to military-civil fusion the least bit.77 DJI is situated within the Nationwide Service Outsourcing Demonstration Base in a software program park, in Constructing G, Space 2, No. 34, Jinye 1st Street.78 The Nationwide Outsourcing Demonstration Base, highlighted in inexperienced in Determine 1 beneath, contains plenty of Fortune 500 corporations equivalent to IBM (U.S.), Emerson (U.S.), SAP (Germany), NTT Knowledge (Japan), and Fujitsu (Japan).79 See additionally Determine 1 Translation, connected hereto as Exhibit F. DJI’s presence within the Xi’an Excessive Tech Zone no extra makes it a CMC than any of those different U.S. and worldwide corporations. 77 See Exhibit E for a certificates by the Xi’an Excessive-Tech Zone Funding Cooperation Bureau, which is a part of the administration of the Excessive-Tech Zone. 78 Jinye Yilu 34 Hao Guojia Fuwu Waibao Shifan Jidi Erqu G Zuo (锦业一路 34 号国家服务外包示 范基地二区 G 座) [Building G, Area 2, National Service Outsourcing Demonstration Base, No. 34, Jinye 1st Road]. 79 Lai Touzi (来投资) [Investment], Yuanqu Jianjie (园区简介) [Introduction to the Software Park], Xian Gaoxin (西安高新) [Xian High Tech], https://tinyurl.com/2hnte2ck (final visited Oct. 17, 2024). Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 41 of 56
42 Determine 1. Nationwide Service Outsourcing Demonstration Base 126. As well as, there are a variety of extra U.S. and worldwide Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 42 of 56
43 corporations—together with, for instance, HSBC,80 Customary Chartered Financial institution,81 Shell Oil,82 TUV,83 and Texas Instruments84—which can be DJI’s neighbors, which additional illustrates that DJI will not be situated in any military-civil fusion zone. 127. In assist of its declare that the Xi’an Excessive Tech Zone is a “military-civil fusion enterprise zone,” the Report cites a witness assertion from a 2020 listening to earlier than the Senate Committee on Banking, Housing, and City Affairs. The witness, who labored at a consulting agency, referred to the Xi’an Excessive Tech Zone as a “military-civil fusion enterprise zone” within the context of stating that an organization known as BYD had an R&D heart within the zone. 85 She defined that such a “military-civil fusion enterprise zone” is “devoted to the incubation of, in addition to, data change, amongst MCF [military civil fusion] entities.” 86 128. The witness’s characterization of the zone is inaccurate and contradicted by the presence of a number of U.S. and worldwide corporations situated within the zone. The Report 80 Guanyu Huifeng Yinhang (Zhongguo) Youxian Gongsi Xian Xidajie Zhihang Qianzhi Ji Gengming Gonggao (关于汇丰银行（中国）有限公司西安西大街支行 迁址及更名公告) [Announcement on the relocation and name change of Xi’an West Street Branch of HSBC Bank (China) Limited], Huifeng Yinhang (汇丰银行) [HSBC Bank] (Could 16, 2024), https://tinyurl.com/59bunpdf. 81 Fenzhihang Chaxun (分支行查询) [Branch Inquiry], Zhada Yinhang (渣打银行) [Standard Chartered Bank], https://tinyurl.com/3nsw74s8 (final visited Oct. 17, 2024). 82 Yanchang Shell Petroleum Co., Ltd., Yanchang Qiaopai Shiyou Youxian Gongsi (延长壳牌石油 有限公司) [Yanchang Shell Petroleum Co., Ltd.], https://tinyurl.com/26atsbnm (final visited Oct. 16, 2024). 83 Xian Bangongshi (西安辦公室) [Xi’an Office], TÜV SÜD, https://tinyurl.com/8xzvx25e (final visited Oct. 17, 2024). 84 Zhongguoqu Lianxi Xinxi (中国区联系信息) [China contact information], Dezhou Yiqi (德州仪 器) [Texas Instruments], https://tinyurl.com/4hr7aawy (final visited Oct. 17, 2024). 85 Threats Posed by State-Owned and State-Supported Enterprises to Public Transportation: Listening to earlier than the H. Comm. On Banking, Housing and City Affairs, 116TH CONG. 2 at 47 (2020), https://tinyurl.com/4bdh3jxd. 86 Id. Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 43 of 56
44 makes no effort to confirm the accuracy of the witness’s declare. See Metropolis of New Orleans v. SEC, 969 F.second 1163, 1167 (D.C. Cir. 1992) (“[A]n company’s reliance on a report or research with out ascertaining the accuracy of the info contained within the research or the methodology used to gather the info is bigoted.” (inner citation marks omitted)). As well as, as proven in Determine 1 above, BYD (比亚迪) is situated exterior of the Nationwide Service Outsourcing Demonstration Base, the place DJI and a number of U.S. and worldwide corporations are situated. 129. The witness probably conflated one subpart of the zone with your complete Xi’an Excessive Tech Zone. Primarily based on a public search on Baidu Map, it seems that, whereas BYD will not be situated in a military-civil fusion industrial park, there may be one such park situated lower than two kilometers from it. 87 130. Against this, as proven in Determine 2 beneath, DJI (in inexperienced) is situated over six kilometers away from the obvious military-civil fusion industrial park (in pink). DoD can’t deal with DJI—nor any of the businesses within the Nationwide Service Outsourcing Demonstration Base—as residing in a military-civil fusion industrial park the place it doesn’t in reality reside. See additionally Determine 2 Translation, connected hereto as Exhibit F. 87 Baidu Map Seek for BYD and Army-Civil Fusion Industrial Park, Baidu Ditu (百度地图) [Baidu Map], https://tinyurl.com/ebad9djd (final visited Oct. 16, 2024). Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 44 of 56
45 Determine 2. Distance Between DJI (inexperienced) and the Obvious Army-Civil Fusion Industrial Park (pink) 88 131. The Report additional cites to an article that stories that the administration committee of Xi’an Excessive Tech Zone signed a memorandum of understanding (“MoU”) with the Xi’an Client High quality Supervision Bureau and Shaanxi Aviation Trade Administration on collectively selling the strategic work of military-civilian integration {industry} standardization. 89 Report at 16. Opposite to the Report’s suggestion, the mere existence of that MoU doesn’t render the Xi’an Excessive Tech Zone as a complete, and positively not the Nationwide Service Outsourcing Demonstration Base, a military-civil fusion zone. 88 Baidu Map Seek for DJI and Army-Civil Fusion Industrial Park, Baidu Ditu (百度地图) [Baidu Map], tinyurl.com/yc72ebzu (final visited Oct. 17, 2024). 89 Gaojishu Chanyesi ( 高技术产业司 ) [High Technology Industry Department], Quanmian Chuangxin Gaige Shiyan Baijia Anli Zhi Sishiliu (全面创新改革试验百佳案例之四十六) [FortySix of the Top 100 Cases of Comprehensive Innovation and Reform Experiments], Guojia Fazhan He Gaige Weiyuanhui ( 国 家 发 展 和 改 革 委 员 会 ) [National Development and Reform Commission], https://tinyurl.com/yc87nxym (final visited Oct. 17, 2024). Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 45 of 56
46 Fairly, the MoU probably pertains to the military-civil fusion industrial park, as to which DJI has no connection. 132. As well as, the Report alleges that, in a 2017 municipal improvement plan, the Qujing Metropolis Individuals’s Authorities, situated in Yunnan Province, recognized DJI as a goal civilian firm for outreach to develop the native UAV {industry} and to facilitate the municipal authorities’s plan to advertise military-civil fusion. Id. Nonetheless, the Report fails to say that DJI didn’t take Qujing up on its provide; DJI has no presence in Qujing and has no relationship with the Qujing municipal authorities. 133. Accordingly, the Report fails to display that DJI resides in or is affiliated with any military-civil fusion enterprise zone, nor that DJI receives authorities help via such zone. (f) Class 6: “Entities awarded with receipt of army manufacturing licenses by the Authorities of China, equivalent to a Weapons and Gear and Analysis and Manufacturing Unit Categorized Qualification Allow, Weapons and Gear Analysis and Manufacturing Certificates, Weapons and Gear High quality Administration System Certificates, or Gear Manufacturing Unit Qualification.” 134. The sixth class of a “military-civil fusion contributor” is an entity that’s “awarded with receipt of army manufacturing licenses by the Authorities of China, equivalent to a Weapons and Gear and Analysis and Manufacturing Unit Categorized Qualification Allow, Weapons and Gear Analysis and Manufacturing Certificates, Weapons and Gear High quality Administration System Certificates, or Gear Manufacturing Unit Qualification.” The Report makes no allegations underneath this class. Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 46 of 56
47 (g) Class 7: “Entities that publicize on nationwide, provincial, and non-governmental army tools procurement platforms within the Individuals’s Republic of China.” 135. The seventh class of a “military-civil fusion contributor” is an entity that “promote[s] on nationwide, provincial, and non-governmental army tools procurement platforms within the Individuals’s Republic of China.” The Report makes no allegations underneath this class. (h) Class 8: “Some other entities the Secretary determines is acceptable.” 136. The ultimate class of a “military-civil fusion contributor” is another entity that “the Secretary determines is acceptable.” The Report makes no allegations underneath this class. * * * * * 137. In sum, the Report’s scattershot makes an attempt to contrive a foundation for designating DJI all fail. I. DoD’s Determination to Designate DJI as a Chinese language Army Firm Has Resulted in Important and Ongoing Monetary and Reputational Hurt 138. On account of DoD’s illegal and misguided determination to position and preserve DJI on the CMC Listing, DJI has suffered important and ongoing monetary and reputational hurt. 139. Due to the CMC designation, which marks DJI as a nationwide safety menace, U.S. and worldwide clients have terminated present contracts with DJI and refuse to enter into new ones. 140. DJI and its workers now endure frequent and pervasive stigmatization. U.S. workers of DJI have been repeatedly harassed and insulted in public locations. Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 47 of 56
48 141. These harms are neither random nor sudden: they’re the supposed consequence of a CMC designation. Congress created the CMC Listing to “title and disgrace” the designated corporations with a view to dissuade the U.S. and worldwide group from doing enterprise with them.90 As Reuters noticed, designation as a CMC “could be a blow to designated corporations’ reputations and represents a stark warning to U.S. entities and firms concerning the dangers of conducting enterprise with them.”91 Commentators have known as DoD’s designation of DJI “a warning to buyers to avoid the corporate.”92 142. Entities throughout the U.S. have heeded DoD’s warning. Many state and native governments have determined to discontinue their relationships with DJI since its CMC designation. Arkansas, Mississippi, and Tennessee have all restricted the usage of, or funding for, DJI drones by state and native businesses.93 And Utah went even additional, passing a regulation that prohibits entities on the CMC Listing, like DJI, from shopping for any land in that state. Utah Code 63L-13-201-02 (2024). 143. DoD’s actions additionally hurt customers and the general public at giant. As described above, supra paragraphs 23 via 26, DJI UAVs are the preferred drones amongst publicsafety businesses and different first responders in the US. In the event that they keep away from utilizing DJI drones attributable to reputational or nationwide safety considerations, this can negatively influence publicsafety companies and needlessly heighten risks throughout emergency administration. This 90 Brunner & Weinstein, supra word 23. 91 Idrees Ali, Alexandra Alper & Michael Martina, Pentagon calls out Chinese language corporations it says are serving to Beijing’s army, REUTERS (Feb. 1, 2024), https://tinyurl.com/4cmra6pn. 92 US places Chinese language drone big DJI on army ties blacklist, AL JAZEERA (Oct. 7, 2022), https://tinyurl.com/2br5x2yz. 93 Mark Albert, As states ban Chinese language-made drones, officers increase alarm, WVTM13 (July 25, 2023), https://tinyurl.com/se554n3t. Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 48 of 56
49 makes communities throughout the US much less secure, search and rescue missions extra onerous, and catastrophe reduction harder to perform. 144. An injunction would cease the above harms by reversing and eradicating the CMC label, which finally stigmatizes an organization that helps preserve America secure and has different socially useful impacts. 145. DJI thus challenges DoD’s most up-to-date redesignation on January 31, 2024, which, because the consummation of DoD’s decision-making course of with respect to DJI’s placement on the CMC Listing, constitutes “remaining company motion” topic to judicial overview. 146. The APA moreover instructs courts to “compel company motion unlawfully withheld or unreasonably delayed.” 5 U.S.C. § 706(1); see additionally id. § 551(13) (“‘[A]gency motion’ contains . . . failure to behave[.]”). Part 1260H instructions DoD to “make . . . deletions to the newest checklist . . . on an ongoing foundation based mostly on the newest data accessible.” Sec. 1260H(b)(3). Thus, DoD’s January 31, 2024 redesignation additionally qualifies as a failure to “delet[e]” DJI from the CMC Listing: company motion that DJI has requested and DoD has withheld. CLAIMS FOR RELIEF COUNT I Violation of the Administrative Process Act: Arbitrary and Capricious Company Motion, Motion in Extra of Statutory Authority and In any other case Not in Accordance with Regulation, 5 U.S.C. § 706(2) (In opposition to All Defendants) 147. Plaintiff realleges and incorporates by reference the allegations contained in all the previous paragraphs. 148. The statute invoked by Defendants doesn’t authorize their motion. Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 49 of 56
50 149. Defendants have authority underneath Part 1260H of the FY2021 NDAA to “determine every entity the Secretary determines, based mostly on the newest data accessible, is working straight or not directly in the US or any of its territories and possessions, that may be a Chinese language Army Firm” (“CMC”). Sec. 1260H(a). Additionally they “shall make additions or deletions” to that checklist “on an ongoing foundation based mostly on the newest data accessible.” Id. § 1260H(b). 150. Part 1260H permits the Secretary of Protection to designate corporations as CMCs if one in every of both two situations is met. 151. First, the Secretary could designate an organization as a CMC whether it is “straight, not directly, or beneficially owned, managed or appearing on behalf of the Individuals’s Liberation Military or another group subordinate to the Central Army Fee.” Sec. 1260H(d). 152. DJI will not be owned, managed, or appearing on behalf of the Individuals’s Liberation Military or another group subordinate to the Central Army Fee. Nor do Defendants assert in any other case, claiming as an alternative that DJI is “not directly owned by the Chinese language Communist Celebration (CCP).” Report at 5, 6. 153. Even when that allegation had been legally related (which it’s not), DJI will not be straight or not directly owned by the Chinese language Communist Celebration. 154. Second, the Secretary could designate an organization as a CMC if it’s a “military-civil fusion contributor to the Chinese language protection industrial base.” Sec. 1260H(d). DJI doesn’t fulfill this situation as a result of it doesn’t contribute to military-civil fusion, army modernization, or in any other case help the Chinese language protection industrial base. Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 50 of 56
51 155. Furthermore, DJI doesn’t match any of the classes listed by the statute for qualifying as a “military-civil fusion contributor.” Id. § 1260H(d)(2). 156. DJI subsequently doesn’t qualify as a CMC, and, in failing to take away DJI from the CMC Listing, Defendants additionally did not abide Congress’s obligatory command that they “shall make . . . deletions” to the CMC Listing “on an ongoing foundation based mostly on the newest data accessible.” Id. § 1260H(b). 157. Defendants’ designation is subsequently “arbitrary, capricious, an abuse of discretion, or in any other case not in accordance with regulation” and is “in extra of statutory jurisdiction, authority, or limitations” underneath the APA. 5 U.S.C. § 706(2)(A), (C). COUNT II Violation of the Administrative Process Act: Arbitrary and Capricious Company Motion, Motion Opposite to Required Process, Motion Unsupported by Substantial Proof, 5 U.S.C. § 706(2) (In opposition to All Defendants) 158. Plaintiff realleges and incorporates by reference the allegations contained in all the previous paragraphs. 159. Defendants’ failure to articulate a passable clarification for designating DJI as a CMC is bigoted and capricious, and their factual discovering that DJI qualifies as a CMC is unsupported by substantial proof and subsequently can be arbitrary and capricious. 160. “Reasoned decision-making requires that an company ‘articulate a passable clarification for its motion’ with a ‘rational connection between the details discovered and the selection made.’” Xiaomi Corp., 2021 WL 950144 at *4 (quoting Motor Automobile Mfrs. Ass’n of U.S. Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)). Defendants’ conclusory evaluation doesn’t present a “rational connection” between the details discovered and the choice to designate DJI as a CMC. This contains, however will not be restricted to, Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 51 of 56
52 Defendants’ failure to make the authorized conclusion vital underneath Part 1260H(d) that DJI is “straight, not directly, or beneficially owned, managed or appearing on behalf of the Individuals’s Liberation Military or another group subordinate to the Central Army Fee,” Report at 5-6; refusal to think about publicly accessible data and the July 27, 2023 delisting petition, which disproves their claims; and neglect of the APA’s requirement to “articulate a understandable customary” for which entities qualify as CMCs. ACA Int’l, 885 F.3d at 700 (quotation omitted). 161. An company’s factual findings should even be “supported by substantial proof.” Foster v. Mabus, 103 F. Supp. 3d 95, 109 (D.D.C. 2015) (quotation omitted). Right here, the proof that Defendants purport to depend upon is both false, contravened by the general public document or DJI’s delisting petition, or inadequate to assist Defendants’ factual discovering that DJI is a CMC. Defendants’ factual findings are thus unsupported by substantial proof. 162. Defendants’ designation of DJI is subsequently “arbitrary, capricious, an abuse of discretion, or in any other case not in accordance with regulation,” “with out observance of process as required by regulation,” and “unsupported by substantial proof[.]” 5 U.S.C. § 706(2)(A), (D)-(E). COUNT III Violation of the Administrative Process Act: Company Motion Unlawfully Withheld or Unreasonably Delayed, 5 U.S.C. § 706(1) (In opposition to All Defendants) 163. Plaintiff realleges and incorporates by reference the allegations contained in all the previous paragraphs. 164. When redesignating DJI on January 31, 2024, Defendants did not delete DJI from the CMC Listing, a discrete company motion that Part 1260H required. Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 52 of 56
53 165. 5 U.S.C. § 706(1) creates a reason behind motion to “compel company motion unlawfully withheld or unreasonably delayed.” Claims underneath Part 706(1) “can proceed solely the place a plaintiff asserts that an company did not take a discrete company motion that it’s required to take.” Ctr. for Organic Range v. Zinke, 260 F. Supp. 3d 11, 20 (D.D.C. 2017) (citing Norton v. Southern Utah Wilderness Alliance, 542 U.S. 55, 62 (2004)). 166. Right here, Part 1260H(b) supplies that requirement, stating that the Secretary of Protection “shall make . . . deletions to the newest checklist” of Chinese language Army Firms “on an ongoing foundation based mostly on the newest data accessible.” 167. On July 27, 2023, DJI offered Defendants proof establishing that DJI didn’t meet the statutory standards for designation as a CMC, however on January 31, 2024, Defendants nonetheless redesignated DJI as a CMC. 168. The Report that Defendants relied upon to redesignate DJI neither references nor considers the proof DJI submitted, indicating that Defendants didn’t depend on the newest data accessible. 169. Moreover, the Report additionally depends on proof that’s both false, contravened by the general public document, or in any other case inadequate to make a factual discovering that DJI is a CMC, thus indicating that Defendants didn’t depend on the newest data accessible. 170. Defendants have subsequently did not take away DJI from the CMC Listing in violation of their obligatory responsibility underneath Part 1260H to make “deletions” in mild of “the newest data accessible.” Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 53 of 56
54 171. Defendants’ refusal to take away DJI from the CMC Listing thus qualifies as company motion “unlawfully withheld or unreasonably delayed” underneath the APA. 5 U.S.C. § 706(1). COUNT IV Violation of the Administrative Process Act: Arbitrary and Capricious Company Motion, Motion Opposite to Constitutional Proper, Energy, Privilege, or Immunity, 5 U.S.C. § 706(2) (In opposition to All Defendants) 172. Plaintiff realleges and incorporates by reference the allegations contained in all the previous paragraphs. 173. The Fifth Modification to the U.S. Structure supplies: “[n]o individual shall . . . be disadvantaged of life, liberty, or property, with out due means of regulation[.]” U.S. Const. amend. V. The Due Course of Clause of the Fifth Modification requires that events disadvantaged of their property obtain ample discover and a possibility to be heard. Mathews v. Eldridge, 424 U.S. 319, 334–35 (1976). 174. On account of Defendants’ actions, DJI has misplaced enterprise offers, been stigmatized as a nationwide safety menace, and been banned from contracting with a number of federal authorities businesses. DJI has thus suffered a deprivation of liberty and property. 175. DJI didn’t obtain any discover or course of previous to that deprivation of liberty and property, not to mention due means of regulation. 176. The denial of any pre-deprivation course of in anyway is unjustified by any nationwide safety pursuits, and the danger of misguided deprivation of liberty or property from Defendants’ motion is intolerably excessive underneath the Fifth Modification to the U.S. Structure. 177. Defendants’ designation is subsequently “arbitrary, capricious, an abuse of discretion, or in any other case not in accordance with regulation,” and “opposite to constitutional proper” underneath the APA. 5 U.S.C.§ 706(2)(A), (B). Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 54 of 56
55 PRAYER FOR RELIEF Plaintiff respectfully prays that this Courtroom enter an order and judgment: A. Declaring that Defendants’ designation is null, void, and with no pressure and impact; B. Declaring that Defendants’ designation will not be in accordance with regulation throughout the which means of 5 U.S.C. § 706(2); in extra of statutory jurisdiction, authority, or limitations throughout the which means of 5 U.S.C. § 706(2); and opposite to constitutional proper throughout the which means of 5 U.S.C. § 706(2); C. Declaring that Defendants’ failure to delete DJI from the CMC Listing is motion unlawfully withheld throughout the which means of 5 U.S.C. § 706(1); D. Vacating and setting apart the designation; E. Compelling Defendants to delete DJI from the CMC Listing; F. Completely enjoining Defendants and their officers, workers, and brokers from imposing, implementing, making use of, or taking any motion in anyway underneath, or in reliance on, the designation; G. Awarding Plaintiff the prices of this litigation, together with affordable attorneys’ charges; and H. Such different and additional reduction as this Courtroom could deem simply and correct. Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 55 of 56
56 Dated: Washington, DC October 18, 2024 PAUL, WEISS, RIFKIND, WHARTON & GARRISON LLP By: /s/ Kannon Okay. Shanmugam Kannon Okay. Shanmugam (D.C. Bar No. 474304) Roberto J. Gonzalez (D.C. Bar No. 501406) Samuel Rebo, Software for admission Professional Hac Vice forthcoming 2001 Okay Road, N.W. Washington, DC 20006 Tel: (202) 223-7325 [email protected] [email protected] [email protected] Loretta E. Lynch, Software for admission Professional Hac Vice forthcoming Simona Shimeng Xu, Software for admission Professional Hac Vice forthcoming 1285 Avenue of the Americas New York, NY 10019 Tel: (212) 373-3000 [email protected] [email protected] Case 1:24-cv-02970 Doc 1 Filed 10/18/24 Web page 56 of 56
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