A new lawsuit filed by Ukrainian civilians in U.S. courts illustrates a growing and often misunderstood risk for U.S. technology companies: you can face severe legal and reputational consequences even when you believe you’ve done everything right. In this case, plaintiffs allege that U.S.-made microchips were diverted, without the manufacturers’ knowledge, to the Russian military and used in missile and drone attacks on Ukraine.

The lawsuit is a timely demonstration that exposure doesn’t depend on intent or direct involvement. Civil actions, alongside government penalties, are becoming a powerful tool for holding companies accountable for gaps in supply chain oversight. As diversion risks increase, so does the need for rigorous due diligence and end‑user verification at every step of the supply chain.

Below, we break down the case to help companies understand how these risks emerge and what practical steps can reduce the likelihood of facing similar litigation.

Background

In December 2025, Ukrainian civilians filed suit against U.S.-based technology companies Intel Corp., Advanced Micro Devices Inc. (AMD), Texas Instruments Inc., and their distributor, Mouser Electronics. The lawsuits, brought by Watts Law Firm LLP in cooperation with BakerHostetler LLP in a Texas court, allege that the companies negligently allowed their microchips to be diverted to Russia, where they were incorporated into missiles and drones used against civilian infrastructure. As of early December 2025, 20 plaintiffs are represented by the law firms with each lawsuit seeking more than $1 million in reparations.

As of this writing, the defendants have not yet responded to the claims, making it too early to assess the likelihood of success. The companies named in the suit maintain that they comply with U.S. export controls and sanctions and do not directly supply products to Russia and other sanctioned jurisdictions, signaling that they intend to contest the allegations rather than pursue early settlement.

Regardless of the eventual outcome, the litigation itself carries significant financial, operational, and reputational costs. The case underscores a critical reality: supply chain diversion can create legal exposure even for companies that believe they are fully compliant.

Export Controls and Due Diligence Negligence at Fault for Diversion

The lawsuit makes four main claims against the defendants:

1. Negligence. The plaintiffs claim these companies failed to adequately design and enforce export control systems. They argue that the defendants neglected to perform due diligence on high-risk customers, ignored government warnings about product diversion risks, and continued sales to risky transshipment hubs and intermediaries with ties to diversion activities. This negligence allegedly enabled the Russian military to obtain and use the companies’ microchips in weapons systems used against Ukrainian civilians.
2. Negligence per se. The plaintiffs assert that these companies violated US export control laws, sanctions, and executive orders aimed at preventing sensitive technology from reaching hostile actors. The plaintiffs argue that these violations on their own constitute negligence.
3. Gross negligence. The plaintiffs allege that these companies were aware of the high diversion risks from public reports and government warnings. Though aware, the companies continued sales, fully understanding the potential harm.
4. Wrongful death and survival claims. The plaintiffs, who are families of victims killed in missile and drone attacks, claim these US companies’ negligence directly caused victims’ deaths. Plaintiffs seek compensation for mental anguish, loss of companionship, and other damages under Texas law. Survival claims also seek damages for physical pain, medical expenses, and funeral costs.

Challenges and Risks

Companies with insufficient supply chain compliance face significant reputational risks. Consumers, investors, and other stakeholders are placing increasing pressure on businesses to act ethically and in alignment with international norms. In addition to legal settlements, reputational damage could decrease companies’ long-term market value.

Relying on supply chain partners without rigorous internal controls or incentives to comply with export regulations presents another risk. Examples include partners with low transparency and insufficient secondary sales tracking exposing companies to liability. Companies can decrease these risks with comprehensive diversion controls and supply chain monitoring processes.

Best Practices and Recommendations

Ultimately, companies are legally responsible for sanctions compliance whether or not they are actively managing it. To mitigate the risk of diversion-related lawsuits along with sanctions and export controls enforcement, US tech companies need to take a proactive due diligence approach. A proactive due diligence approach is particularly critical when dealing with potential dual-use or military end-user products.

The proactive due diligence approach differs from a reactive approach, which only addresses issues when suspicious transactions arise. A proactive approach includes an ongoing system of checks and audits tracking end-use and end-users of all products. This proactive approach should also include monitoring the whole supply chain, including secondary distributors and end customers.

Key best practices include:

Enhanced Due Diligence Procedures. Conduct comprehensive background checks on all partners, including secondary distributors. Require detailed, verified end-user certificates before agreeing to transactions. This practice supports US export controls compliance and lowers the risk of diversion to sanctioned countries like Russia.

Regular Auditing and Compliance Reviews. Establish internal compliance teams that regularly review the entire supply chain, not just direct sales channels. Checks should include tracing products from manufacturers to end users to ensure that no diversion occurs at any point.

Engage Legal and Regulatory Experts. Partner with external legal advisors to stay informed on export controls and sanctions developments. Keeping up with and adapting to ever-changing international trade laws is key to avoiding legal violations.

Supply Chain Monitoring Tools. Leverage cutting-edge software solutions that track products through every stage of the supply chain. Technologies like blockchain can provide immutable records of transactions, improving transparency and accountability.

Conclusion

At FiveBy, we have the expertise and specialized professionals to help companies navigate the complex compliance challenges surrounding export controls and sanctions, particularly with military end-use technology. We understand the growing risks of civil lawsuits, as highlighted by recent cases against US technology firms and are equipped to assist businesses in mitigating these threats.

FiveBy’s Risk Intelligence Team works with industry-leading tech companies to conduct thorough due diligence, implement effective diversion checks, and verify supply chains. We support our clients by proactively finding ways to safeguard their operations, reduce legal risk exposure, and provide reputational protection from product misuse and international conflict.

Let’s Talk

Contact us to learn how we can help you stay compliant, protect your reputation, and build a culture of integrity across borders.