DJI Sues Insta360 Over Luna Camera, Seeking Permanent Injunction in U.S. Court
DJI has filed a six-patent infringement lawsuit against Insta360 in the U.S. District Court for the Eastern District of Texas, just one day after Insta360 launched its Luna series gimbal camera in the American market — a legal strike that threatens to derail the challenger's most critical product launch and compounds a financial squeeze already visible in its public filings.
The complaint, filed June 10, 2026, targets Insta360's Luna Ultra, which debuted June 9 and was positioned as a direct rival to DJI's yet-to-ship Osmo Pocket 4P. DJI is seeking a permanent injunction that would effectively block Luna from U.S. shelves. Insta360 shares, which already trade roughly 58% below their peak market capitalization of approximately RMB 150 billion (US$20.8 billion) reached after the company's STAR Market listing in 2025, face additional downward pressure as investors price in litigation risk on top of deteriorating profit margins.
Wilful-Infringement Exposure Raises Stakes for Insta360
DJI sent a formal patent-notice letter to Insta360 on May 26, 2026 — two weeks before the Luna launch — explicitly identifying the six patents at issue. Under U.S. patent law, a defendant that proceeds with an infringing product after receiving actual notice of a patent can be found liable for wilful infringement, which exposes it to treble damages on any award.
The asserted patents cover technology embedded in the Osmo Pocket product line: three-axis gimbal electromechanical control algorithms, shooting-mode switching logic, and subject-tracking systems. DJI's complaint states that the Luna Ultra's rotating-screen design, gimbal architecture, and component layout are "strikingly similar" to the Osmo Pocket 3, employing "identical proportions, identical handle-mounted gimbal structure, and identical component arrangement."
Two of the six patents relate to industrial design — a category where infringement is, as DJI's filing notes, assessable by any reasonable observer placing the two products side by side.
Insta360 Fires Back With Acquired Patents, Raising Validity Questions
Rather than responding directly to DJI's six claims, Insta360 launched a counter-offensive: five patent suits against DJI in U.S. courts, paired with a parallel invalidation petition filed in China against the same patent families. The tactical symmetry is deliberate, designed to create litigation leverage and slow any injunction proceedings.
However, the counter-attack carries structural weaknesses. Four of the five patents Insta360 asserted were acquired through assignment rather than developed in-house, and at least one assignment had not completed formal registration procedures at the time of filing. Courts scrutinize standing in such cases; an incomplete chain of title can render a patent unenforceable as a litigation weapon.
The contrast with DJI's position is stark. DJI's asserted patents flow directly from more than 12 years of continuous R&D investment in five core domains — gimbal mechanics, motor control, imaging processing, shooting control, and AI tracking algorithms — beginning with the first-generation Osmo in 2015 and iterating through the Osmo Pocket 1 (2018), Pocket 2 (2020), and the commercially dominant Pocket 3 (2023).
Pocket 3's Market Dominance Quantifies What Is Being Defended
The commercial stakes behind DJI's IP enforcement are not abstract. The Osmo Pocket 3, launched in October 2023, has held the No. 1 position on Japan's video camera sales chart for 20 consecutive months, reaching a 34.1% market share in June 2025 — meaning roughly one in three video cameras sold in Japan is a Pocket 3. The upcoming Pocket 4P, featuring 17-stop native dynamic range, D-Log 2 colour science, and AI Subject Tracking 6.0, is the product Insta360's Luna series is explicitly designed to undercut.
The global market context amplifies the financial logic of enforcement. The worldwide handheld intelligent camera market shipped 16.65 million units in 2025, up 83% year-on-year, generating revenues exceeding RMB 46.1 billion (US$6.4 billion), according to IDC data cited in industry filings. IDC projects the market to surpass 40 million units by 2030, implying a five-year compound annual growth rate of approximately 20%. Gimbal cameras specifically grew more than 100% in 2025. For DJI, allowing a competitor to free-ride on patented core technology in the fastest-growing sub-segment of this market is not a tolerable outcome.
Insta360's Financials Reveal a Company Fighting on Multiple Fronts
The litigation arrives at a moment of acute financial stress for Insta360. The company's revenue trajectory remains impressive — Q1 2026 revenue reached RMB 2.48 billion (US$344 million), up 83.1% year-on-year, continuing a streak of near-doubling quarterly growth that began in Q1 2025 (40.7%, 58.1%, 92.7%, 93.2% in successive quarters). But revenue growth has comprehensively decoupled from profitability.
Net profit margin collapsed to 3.4% in Q1 2026, down from 14.8% in Q4 2025. Gross margin fell to 37.5% in Q4 2025, a decline of 1,080 basis points year-on-year, with the steepest erosion concentrated in consumer-grade products — the segment most exposed to price competition with DJI.
Operating expenses tell the story of a full-spectrum war. In full-year 2025:
- Sales and marketing expenses: RMB 1.68 billion (US$233 million), up RMB 850 million year-on-year — nearly doubling, driven by channel expansion (offline store count grew from a small base to nearly 300 locations, a 50-fold increase over three years) and marketing spend that rose 145.5%.
- R&D expenses: RMB 1.53 billion (US$213 million), up RMB 750 million year-on-year, nearly doubling. In Q1 2026 alone, R&D spending reached RMB 470 million (US$65 million), representing 18.7% of quarterly revenue — a ratio higher than most Chinese internet platforms. Notably, Insta360 expenses all R&D costs, capitalising nothing, reflecting either conservative accounting or auditor reluctance to certify commercial viability for projects including drone platforms, panoramic gimbal chips, and AI algorithm development.
- Free cash flow: negative RMB 1.56 billion (US$217 million) in Q1 2026 — the largest single-quarter cash outflow since the company's listing.
Inventory days have stretched beyond 220, a symptom of supply-chain disruption. Insta360 founder Liu Jingkang disclosed in a December 2025 internal letter that key component suppliers had come under pressure to adopt exclusive arrangements with DJI — a claim that, if substantiated, would represent a separate competitive-conduct concern.
Research headcount reached 2,180 in 2025, up 60% year-on-year, with average annual compensation rising 13.6% to RMB 544,000 (US$75,600) — an aggressive talent war waged simultaneously with the product and legal battles.
IP Enforcement Reflects a Structural Shift in Chinese Tech Competition
The DJI-Insta360 confrontation is the most visible instance of a broader pattern: Chinese technology companies that built global market positions now actively defending those positions through the same IP mechanisms that Western incumbents historically used against them.
The parallel to Tesla's 2014 patent-opening announcement is instructive precisely because the analogy breaks down on inspection. Tesla's "open patent" pledge applied to non-core technologies — battery pack structures, charging interfaces, thermal management — while full self-driving algorithms, the actual competitive moat, were never released. DJI's enforcement action targets exactly the category of technology Tesla kept closed: the core control algorithms and mechanical architectures that define product differentiation.
Insta360 is not without precedent in navigating U.S. IP litigation. The company successfully defended a Section 337 investigation brought by GoPro in the United States, spending tens of millions of dollars in that process. That experience gives it litigation capability, but the GoPro case involved defending market access for an established product category; the Luna injunction risk is forward-looking, threatening a product that has not yet scaled.
The outcome of the Eastern District of Texas proceedings — a venue historically receptive to patent plaintiffs — will carry implications beyond the two companies. As Chinese hardware brands accelerate their transition from contract manufacturing to proprietary-IP global competition, the enforceability of domestically developed patents in U.S. courts becomes a defining variable for the sector's valuation premium.
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