Multiple Challenges Behind Patent Litigation: Declining Profits and Halved Stock Prices

Ask AI · Why did DJI choose to initiate China’s first patent lawsuit case domestically at this time?

Phoenix Satellite Television Finance & Economics “Company Research Institute”

The battle between DJI and Yingshi Innovation is now spreading from market clashes to courtroom standoffs.

On March 23, DJI Innovation officially filed a lawsuit with the Intermediate People’s Court of Shenzhen, Guangdong Province, accusing Yingshi Innovation of infringing six drone core technology patents involving patent-ownership disputes. The case directly targets compliance flaws on Yingshi Innovation’s side in hiring talent and in the technical R&D process. This is DJI’s first patent-right ownership dispute launched domestically, and its stance is tough. Faced with the surprise attack, Yingshi Innovation responded quickly, clearly stating that its R&D processes are lawful and compliant, and founder Liu Jingkang even pointed back that multiple DJI panoramic and thumb-camera products are already within Yingshi Innovation’s protection under 28 patents. The two sides traded blows, each unwilling to back down, and industry attention continued to rise.

This patent showdown is not accidental, but rather an inevitable result of an escalation in market competition between the two sides. Since 2025, when Yingshi Innovation entered the drone industry with high-profile announcements, while DJI simultaneously launched a counterattack in the panoramic camera market, the two companies have already engaged in close-quarters competition across multiple dimensions, including product layout, pricing strategy, and supply-chain systems. And under the shadow of the lawsuit, Yingshi Innovation’s operational difficulties have become even more apparent: in 2025, although the company’s revenue exceeded 9.86B yuan, its net profit attributable to shareholders fell year over year by 3.08%, leaving it in an awkward situation of “increasing revenue but not profits.” Its stock price has dropped more than 50% from its historical high point, and its market capitalization has shrunk significantly, while pessimism in the capital market continues to spread.

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DJI sues Yingshi over alleged patent infringement; a former employee becomes the “spark” for the dispute

On March 23, DJI Innovation formally filed a lawsuit with the Intermediate People’s Court of Shenzhen, Guangdong Province. The case was filed with accusations that Yingshi Innovation is involved in six patent-right ownership disputes. The patents at issue all focus on core technologies such as drone flight control, structural design, and image processing—directly related to a drone product’s core competitive strength.

In its complaint, DJI clearly asserts that all six patents at issue were completed within one year after its former core R&D personnel left the company, and that these inventions are highly related to the employee’s main job duties during his employment at DJI. Under relevant provisions of the Patent Law, such inventions closely related to duty work are duty inventions, and the right to apply for the patents should belong to DJI according to law. Therefore, DJI directly points to obvious deficiencies in Yingshi Innovation’s compliance regarding talent hiring and technical R&D.

It is worth noting that this is DJI’s first patent-right ownership dispute filed domestically, showing how much it attaches importance to the patents involved, and also reflecting, from another angle, just how intense competition between the two companies has become. The patents at issue cover core technology areas for drones. If DJI’s claims are upheld, Yingshi Innovation’s drone R&D, production, and sales may be directly affected.

In response to this sudden lawsuit impact, Yingshi Innovation moved quickly. On the one hand, it disclosed an explanation announcement on the Shanghai Stock Exchange, clearly stating that as of the announcement date, the company had not yet received the official court-delivered lawsuit materials. On the other hand, it made clear statements regarding the patent dispute, saying that the involved employee(s) joined the company more than a year after leaving DJI, and that the relevant patents are independent innovation results completed during the employee’s tenure at Yingshi. It also said that its R&D process is fully lawful and compliant, and that there is no infringement of any kind.

Yinghi Innovation’s founder Liu Jingkang also spoke publicly, further strengthening its response stance. He said the company always respects legal procedures and objective facts, is not afraid of any legitimate intellectual property litigation, and emphasized that most of the patent applications for the drones at issue were filed earlier. With the company’s product iterations and upgrades, the company has not actually put them into use. In addition, Liu Jingkang also pointed back that multiple DJI panoramic-camera and thumb-camera products are already covered by Yingshi Innovation’s 28 patents. Previously, Yingshi Innovation has always prioritized investing in technical R&D, without proactively initiating lawsuits. In the future, it will continue to release innovative new products, reject stock, homogeneous competition, and expand industry market boundaries through technological innovation.

Looking back at the competitive history between the two sides, this lawsuit is a concentrated outbreak of long-term games. In July 2025, Yingshi Innovation officially announced its move into the drone industry, releasing its first drone product, the Yingling Antigravity A1, directly entering the core market led by DJI and breaking the industry pattern. Soon after, DJI quickly counterattacked by launching the Osmo360 panoramic camera priced at 2,999 yuan, precisely countering Yingshi’s panoramic-imaging advantage that it has developed over many years. After that, the competition between the two sides across product lines, pricing systems, supply chains, and other dimensions kept escalating, ultimately evolving from market competition into a patent dispute at the legal level.

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“Increasing revenue but not profits” combined with valuation pullback; Yingshi Innovation is besieged on all sides

As a leading company in the global panoramic imaging niche segment, Yingshi Innovation’s revenue scale has consistently maintained steady expansion.

According to data, in 2025 the company achieved total operating revenue of 9.86B yuan, with its scale continuing to grow, but the growth in revenue has not effectively translated into an increase in profit, and the dilemma of “increasing revenue but not profits” has become increasingly prominent. Full-year 2025 performance shows that the company’s net profit attributable to shareholders was 964 million yuan, down 3.08% year over year. Adjusted for non-recurring items, net profit was 882 million yuan, with the year-over-year decline widening to 6.74%, indicating a clear weakening of the company’s “cash-generating” ability from its core business.

Behind the continued pressure on profits are the combined effects of multiple unfavorable factors. On the one hand, competition in the consumer-grade intelligent imaging industry is becoming increasingly intense. To solidify market share, Yingshi Innovation has no choice but to adopt price-cut and promotional strategies, and together with fluctuations in upstream raw-material prices, this directly pushed the company’s gross margin down quarter by quarter. On the other hand, the company has diversified into a new drone segment while also continuously advancing R&D and iteration of its existing imaging products. As a result, the growth rates of sales expenses and R&D expenses have far exceeded the growth rate of revenue. The sustained high expense levels continue to absorb the company’s profits, forming a distorted operating pattern of “expanding in scale while profits shrink.”

The performance of the capital market more directly reflects the market’s pessimistic expectations for Yingshi Innovation. In September 2025, the company’s stock price reached a phase high of 377.77 yuan. Afterwards, driven by a stack of negative factors including performance coming in below expectations, intensifying industry competition, unfavorable factors from the patent lawsuit, and the release of restricted shares from lock-up, the stock price continued to fall. As of now, the company’s stock price has cumulatively dropped more than 50% from its historical high, and its market capitalization has fallen sharply. In particular, on a single day, due to news related to the patent lawsuit, market capitalization had once evaporated by around 5 billion yuan.

Meanwhile, the company’s valuation framework has also undergone a deep restructuring. Previously, the market, based on Yingshi Innovation’s high-growth expectations, had given it a high valuation premium typical of technology companies, corresponding to a price-to-earnings ratio of over 90x—significantly higher than the average level for the consumer electronics industry. But as the company’s profit growth rate slowed and its growth logic continued to weaken, the capital market gradually abandoned high-growth expectations and shifted toward a pricing logic centered on performance realization. As a result, the company’s valuation has been forced to return to a reasonable range for the industry, investors’ risk-avoidance sentiment has intensified, and the market’s “voting with its feet” has become increasingly apparent.

To make matters worse, Yingshi Innovation’s push to break out into a cross-industry path has also been difficult to execute. Yingshi, which originally built its niche dominance by relying on panoramic cameras and action cameras, tried to open a second growth curve by entering the drone sector. But it faced a full-spectrum counterattack from industry leader DJI, with pressure across product, price, and patents. In addition, drone R&D requires heavy investment and has a long profit cycle, making it hard for short-term positive returns to be delivered. Meanwhile, competitive pressure on its existing core businesses has also continued to increase. Industry giants such as DJI have accelerated entry into the panoramic imaging field, continuously diverting market share from existing businesses. This has caused growth in the company’s traditional advantage products to peak, and the ceiling for growth in its main business has gradually become visible.

At present, the uncertainty of the patent lawsuit, the softness in the fundamentals of profitability, and the capital market’s pessimistic expectations are intertwined, pushing Yingshi Innovation into a vicious cycle of development. In the future, the company must not only actively respond to long-running patent litigation disputes and build a solid compliance operating system, but also focus on balancing R&D investment with the quality of profitability to defuse the multiple pressures brought by cross-industry competition. How to break the current predicament and achieve high-quality development has become a key question that tests the management team’s long-term operational wisdom.