A Judge Blocks the Pentagon's Lobbying Ban for Alibaba, and DJI's Lobbyists Show Who It Still Reaches

On Oct. 26, a federal judge in California blocked the Pentagon from enforcing a new lobbying restriction against Alibaba Group. The law is aimed at companies the Defense Department has named as Chinese military companies, and the judge found it likely violates the First Amendment. The ruling covers only Alibaba. It also arrives as fresh federal disclosures show that DJI, the drone maker on the same Pentagon list since 2022, still has outside lobbyists working for it in Washington.

Judge Eumi K. Lee of the U.S. District Court for the Northern District of California granted Alibaba's motion for a preliminary injunction in Alibaba Group Holding Ltd. v. Department of Defense (Case 5:26-cv-06227-EKL). Her 26-page order targets 10 U.S.C. 4663, the codified version of Section 851 of the 2025 defense authorization act. The law took effect June 30, 2026.

What the law does

Section 4663 does not stop listed companies from lobbying. It works through the lobbyists' other clients. The Pentagon may not contract with any company that retains the same lobbying firm as a company on the Section 1260H list, the department's roster of Chinese military companies. A lobbying shop with a listed client therefore puts the Pentagon work of its other clients at risk, and those clients have little reason to stay.

Judge Lee described that incentive plainly: "The only rational choice for a lobbying firm is to stop representing Alibaba." The company's experience matched it. According to the order, Alibaba had no registered lobbyists left by June 30, the day the law took effect, and multiple firms told Alibaba that Section 4663 was the reason they withdrew.

How the court got there

Alibaba sought the preliminary injunction on its First Amendment claim alone. The court held that strict scrutiny applies, the toughest standard in constitutional review, because Section 4663 restricts political speech based on who the speaker is. Lobbying the government is petitioning and speech. A law that blocks that channel for named companies, the court reasoned, is a speaker-based restriction.

Under strict scrutiny the government has to show that the law serves a compelling interest and is narrowly tailored to it. DroneXL's reporting on the order says the government offered one exhibit: a joint explanatory statement printed in the Congressional Record in 2024. That statement contained no finding that lobbyists representing listed companies pose a security risk. The court also cited a less restrictive approach, Nebraska's rule requiring an extra acknowledgment, as evidence that narrower options existed.

The relief is narrow:

The injunction bars enforcement of Section 4663 only as it relates to Alibaba.
Alibaba's facial challenge, which argued the law is unconstitutional in every application, was rejected at this stage.
The court set the bond at $100.
Alibaba remains on the 1260H list. The court declined to remove it, saying that question belongs to Alibaba's separate administrative-law claims.

Every other listed company remains subject to the statute. At least one more is suing. According to DroneXL, two U.S. subsidiaries of BYD filed a similar First Amendment challenge on Sept. 25.

DJI's quiet lobbying ledger

For the drone industry, the more telling picture comes from the Lobbying Disclosure Act filings for the third quarter, which covers July 1 through Sept. 30. That is the first full quarter with Section 4663 in force. The reports were filed this month.

Two outside firms still report DJI Technology, Inc. as a client:

CLS Strategies reported $170,000 in income from DJI for Q3. Its listed issue was "Issues and policies pertaining to Unmanned Aircraft Systems."
Liberty Government Affairs reported $27,500 for the same quarter, on issues relating to the FY2027 National Defense Authorization Act and Federal Communications Commission regulatory authority.

DJI's own lobbying report showed $240,000 for the quarter, down from $640,000 in Q4 2025, according to DroneXL. Two firms have also left. Porter Wright Morris & Arthur ended its DJI registration effective Jan. 31, and MO Strategies ended its registration on May 24. Both exits came before the law took effect, and DroneXL notes that neither termination filing gives a reason.

Alibaba told the court it had no registered lobbyists left. DJI's operation shrank, but two firms are still reporting income from the company for the quarter that began after June 30. According to DroneXL, a CourtListener search of federal dockets on Oct. 27 found no DJI challenge to Section 4663.

Why It Matters

DJI's position in Washington has been shaped largely by NDAA language: procurement bans, supply-chain restrictions and now limits on who can speak for listed companies. Liberty Government Affairs' Q3 filing is explicitly about the FY2027 NDAA, the next bill that could reshape drone procurement. That suggests where some of DJI's outside lobbying money is going.

The Alibaba ruling raises the question of how long a lobbying restriction like this can hold up. If other courts follow Judge Lee's reasoning, the government will need more than a single explanatory statement to defend it. For now the protection belongs to Alibaba alone. Companies that have not won relief, DJI among them, remain subject to the statute, and any company that shares a lobbying firm with them risks losing Pentagon contracts, which is the pressure the statute creates.

More deadlines are coming. According to DroneXL, the separate Section 805 ban on indirect purchases through suppliers begins June 30, 2027. Contractors and agencies that buy listed companies' products through intermediaries will need to track that date. The policy fights before then will be lobbied by whoever is still willing to sign the registration.