A major patent dispute has emerged in China's hard tech sector, with DJI filing a lawsuit against Arashi Vision Inc. involving six patent ownership disputes. The case alleges involvement by several former core R&D personnel from DJI, creating significant industry waves. Liu Jingkang, founder of Arashi Vision, personally responded with a lengthy statement, first modestly noting his company's limited resources as a smaller player while expressing understanding of market leaders like GoPro and DJI facing competition. He clarified that when sued, the company would "spend whatever necessary," revealing they had previously spent over $10 million to win a case against GoPro, and would approach the DJI lawsuit with the same mindset.
On March 24, Arashi Vision (688775.SH) announced that after internal investigation, all involved employees had left DJI within the past year. However, patent applications filed by these employees as inventors during that period were shown by existing evidence to be independent innovations developed during their employment at Arashi Vision, with legally compliant R&D processes.
Despite Arashi Vision's firm response, its stock price plunged 6.98% on March 23 when news of the lawsuit broke, wiping out over 5 billion yuan in market capitalization. Industry experts suggest this reflects capital market concerns about litigation uncertainty, particularly since this marks DJI's first domestic patent ownership dispute filing. For Arashi Vision, which already faces profit growth challenges despite revenue increases, high R&D costs combined with litigation expenses create notable financial pressure.
As of March 26's market close, Arashi Vision shares closed at 182.66 yuan per share, down 2.44%, with a total market capitalization of 73.247 billion yuan.
The lawsuit was formally accepted by Shenzhen Intermediate People's Court on March 23, involving six patent disputes covering core technologies including drone flight control, structural design, and image processing. The case centers on a key provision in China's Patent Law regarding service inventions: patent applications for inventions created within one year after leaving an employer, if related to previous job duties, should belong to the original employer.
DJI stated that most of the six patents involved were first filed within one year of the employees' departure. Even for patents filed slightly beyond one year, considering the time needed for patent documentation preparation, they could still be considered inventions created within the one-year period. Notably, for two patents involving drone flight control and structural design, Arashi Vision listed some inventors as "requesting anonymity" in Chinese applications, while corresponding international applications revealed their identities as former DJI core R&D personnel.
Both companies are headquartered in Shenzhen in close proximity. Following DJI's lawsuit, Arashi Vision quickly responded with a clarification announcement stating "R&D processes were legally compliant." Liu Jingkang explained that investigation showed the patents were "ideas and independent innovations generated within Arashi Vision." Regarding the only potentially involved flight control patent enabling "jump flight" effects, Liu claimed the idea originated from him and he deeply participated in its development, noting the patent had limited usefulness under current flight restrictions and offering it to DJI if needed.
Liu emphasized that hiding inventor names in domestic applications while disclosing them in PCT filings was standard practice to delay technical team exposure to headhunters, applying to both former and non-former DJI employees. He argued that if their motive was as DJI alleged, they wouldn't have used these inventors' names in patent applications at all.
Industry analysts note DJI's claims align with Patent Law standards for service inventions, with key evidence including the inventors being former DJI core R&D personnel filing within one year of departure, patents closely related to their previous work, and the suspicious name-hiding operation. Arashi Vision's response relying on "internal ideas" and "non-implemented patents" without full-chain R&D evidence fails to completely dispel technical connection concerns.
Experts also point to logical contradictions in Liu's defense, questioning why systematic inventor anonymity was needed if innovations were truly independent. However, Liu's claim that the "jump flight" patent idea originated from him and that most involved patents were filed 4-5 years ago with limited current usage provides some counterargument against "technical continuity" allegations.
Regarding case progress, Arashi Vision stated they haven't received any court materials or evidence from DJI and will await formal documentation for proper assessment.
Liu noted that most involved drone patents were filed 4-5 years ago, with many becoming unused due to product definition changes. He expressed understanding of market leaders' mentality when facing competition, while pointing out media reports describing DJI's panoramic cameras and thumb cameras as "copying" or "strikingly similar" to their products. He revealed internal analysis showed DJI would infringe on 11 hardware/structure, 8 software method, 6 control method, and 3 accessory patents, though Arashi Vision hadn't proactively sued.
Explaining their non-litigious approach, Liu cited limited resources as a smaller company, prioritizing R&D investment and market expansion through differentiation rather than lawsuits. He noted that despite price wars by larger players, Arashi Vision's differentiation strategy helped the overall market grow over 80% last year, with the company achieving its highest growth rate and revenue record in Q4 2022.
While Liu's "spend whatever necessary" stance appears confident, the approximately 70 million yuan spent on the GoPro case remains substantial for Arashi Vision. According to their 2022 performance report, the company achieved about 9.858 billion yuan in revenue, up 76.85% year-on-year, but net profit attributable to shareholders fell 3.08% to about 964 million yuan. The company attributed the profit decline to high R&D investment, which reached 1.649 billion yuan last year.
The GoPro litigation cost equivalent to 7% of annual net profit, while justifiable, represents significant expenditure. Experts suggest better risk prevention strategies including strict candidate background checks during hiring, patent freedom-to-operate analysis during R&D立项, and internal IP firewalls to prevent new employees from working on directly related technical areas - all costing far less than litigation expenses.
Arashi Vision acknowledged that for smaller companies, such costs could be crippling, noting that both sides incur substantial expenses in such cases. When asked about potential private settlement with DJI, the company said this remained unknown.
Regarding future patent enforcement, Liu stated Arashi Vision would only use patent "nuclear options" when substantially blocked from launching new products in a category. He expressed calmness about the current case, expecting normal court procedures while focusing resources on 7-8 new product series scheduled for release this year.
The company downplayed the lawsuit's impact, calling it non-major and not affecting core operations, though acknowledging secondary market reactions might involve various investor considerations.
Industry analysts highlight DJI's strongest evidence being Arashi Vision's "inventor hiding" operation, where names were concealed in Chinese applications but revealed in PCT filings - a key point in alleging legal obligation avoidance. With over 16,000 global patent applications, DJI possesses strong technical accumulation and举证 capabilities.
Liu emphasized respecting intellectual property while adhering to facts and legal procedures, stating they wouldn't fear patent litigation or engage in存量 competition, but rather expand markets through continuous innovation.
Industry observers note the public dispute follows prolonged underlying tensions between the companies, with current conflicts generally remaining within legal frameworks - representing healthier competition compared to previous industry practices.
Regarding case prospects, experts give DJI higher but not absolute advantage given their dominant market position (over 70% share in consumer drones) and extensive patent litigation experience. While Arashi Vision gained some experience from the GoPro case, that primarily involved patent invalidity and non-infringement defenses rather than ownership disputes. The "inventor hiding" evidence particularly disadvantages Arashi Vision, with potential outcomes including patent ownership reversal, product removal, and compensation if service invention claims are upheld.
Analysts suggest Arashi Vision has more to lose, with drones representing their core "second growth curve" bet. A loss could not only threaten products like the Yingling A1 but also shake market confidence in their technical independence. For DJI, the case concerns protection of their technological "moat," with potential precedent-setting implications for former employees taking technology to competitors, though their diversified business structure provides stronger resilience.
The case reflects deeper conflicts between blurred technical boundaries and normalized talent mobility in hard tech sectors. Arashi Vision's drone expansion represents growth ceiling突破, while DJI's panoramic camera move is defensive counteraction. The gray area lies in defining boundaries between "independent innovation" and "service invention" when technical talent changes employers with know-how. Arashi Vision's 51 "anonymous patents," while claimed as employee privacy protection, objectively create space for legal requirement avoidance.
This lawsuit marks a milestone in China's hard tech industry transition from "wild growth" to "rule-based competition." Regardless of outcome, it reminds the industry that while technology can cross boundaries, intellectual property borders must remain clear; while talent can flow, innovation integrity cannot be compromised.
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