WuXi AppTec Wins Temporary U.S. Court Reprieve

U.S. District Judge James Boasberg has granted WuXi AppTec a preliminary injunction that temporarily bars the Department of Defense from enforcing its June designation of the company as a “Chinese military company.” The order concerns WuXi’s inclusion on the Pentagon’s Section 1260H list and pauses the practical effect of that designation while litigation continues.

The ruling does not permanently resolve the dispute or remove WuXi from the list but prevents the Pentagon, for now, from treating WuXi as subject to that label in a way that would trigger legal or commercial consequences. The decision applies only to WuXi and does not change the status of other companies on the list.

In his opinion, Judge Boasberg found that the Pentagon had misread or mischaracterized parts of the evidence used to justify adding WuXi to the Section 1260H list. A central example was the treatment of data about an investment fund’s holdings in WuXi.

The court said the Defense Department had confused the percentage of the fund’s net asset value invested in WuXi with the percentage of WuXi’s equity owned by the fund. The opinion described this misunderstanding as “flat-out wrong,” underscoring the court’s view that the designation rested on a flawed evidentiary foundation.

The court concluded that WuXi had already suffered irreparable commercial harm in the United States as a result of the designation. The opinion highlighted that WuXi operates six U.S. facilities and employs about 450 people in the country.

WuXi serves more than 1,000 U.S. customers, and U.S.-based clients accounted for roughly 70% of the company’s approximately US$6.7 billion in global revenue last year, the opinion noted. These figures were cited as evidence that a continuation of the designation could significantly disrupt a large share of WuXi’s business.

The preliminary injunction is expressly temporary. It does not strike WuXi from the Section 1260H list and does not bar the Pentagon from attempting to redesignate the company in the future if supported by different evidence.

Other companies on the Section 1260H list, including firms such as Alibaba, Baidu and BYD, are unaffected by this order and remain subject to their existing designations. The Pentagon has declined to discuss the ruling or to say whether it plans to appeal, citing a policy of not commenting on ongoing litigation.