Federal Appeals Court Affirms Pentagon's Blacklisting of Anthropic as Supply-Chain Risk
A three-judge panel of the D.C. Circuit upheld the Department of Defense's designation of AI firm Anthropic as a supply-chain risk, rejecting the company's claim that the ban was unlawful.
A three-judge panel of the U.S. Court of Appeals for the District of Columbia upheld the Pentagon’s decision to blacklist artificial-intelligence company Anthropic, ruling 2-1 that the Department of Defense’s restriction on the firm’s Claude models was justified on national-security grounds. The majority opinion, written by Judge Gregory Katsas and joined by Judge Neomi Rao, said the department had sufficient support for its conclusion that continued integration of Claude into DoD information systems posed a statutory national-security risk. Judge Karen LeCraft Henderson dissented.
The Department of Defense labeled Anthropic a supply-chain risk in March, a designation that bars the military and its contractors from using the company’s AI models. Anthropic had previously sued to overturn the blacklisting, and a separate San Francisco federal judge had ruled one of the designations illegal. The D.C. Circuit’s decision upheld the second designation while delaying its immediate effect, allowing Anthropic to seek a rehearing or an en banc review, and potentially to petition the Supreme Court.
Anthropic’s spokesperson said the company disagrees with the ruling, noting that another federal court had already found a parallel designation unlawful and that the firm is considering further legal options. The dispute stems from negotiations in 2025 over a $200 million contract, during which the DoD sought unrestricted access to Claude models, while Anthropic sought safeguards against use in autonomous weapons or mass surveillance. Defense Secretary Pete Hegseth had accused Anthropic of trying to exert veto power over military operational decisions.
"The Department reasonably feared that Anthropic might manipulate Claude's design to prevent it from performing national-security functions that the Department deems contractually authorized and necessary," wrote Judge Katsas.
The appellate panel gave Anthropic time to request a rehearing before the decision takes effect.