A US federal judge has dismissed a lawsuit filed by China-based drone manufacturer DJI challenging its classification by the Department of Defense as a “Chinese military company.”

In his ruling Friday, US District Judge Paul Friedman in Washington stated that the Department of Defense presented substantial evidence that DJI “contributes to China’s defense industrial base.”

Friedman noted that modified DJI drones were used in the Russia-Ukraine war, stating, “Whether DJI’s policies prohibit military use is irrelevant. This does not change the fact that the technology the company produces has serious military applications, both theoretical and practical.”

However, the judge also found some of the Defense Department’s justifications for adding the company to the list unfounded.

In its previous defense, DJI emphasized that it is “not owned or controlled by the Chinese military.” He also stated that the Department of Defense acknowledged that DJI does not directly manufacture military drones and that its products are intended for consumer and commercial use. The company filed a lawsuit after being listed, claiming it had suffered “loss of business and reputational damage.”

DJI’s loss in this case highlighted other obstacles it faces in the US. Under the new regulation, which will take effect in December, the sale of DJI drones in the US will be prohibited unless the national security agency determines otherwise.

DJI told the press that it was evaluating the court decision and working on potential legal action. The company stated that the decision was “based on a single logic applied to many companies that have never been listed on the stock exchange.”

DJI was previously placed on the sanctions lists of the Department of Commerce and the Department of the Treasury, and then added to the Department of Defense’s list of Chinese military companies in 2022.