Appeals Court Lets the Pentagon Designate Anthropic a Supply-Chain Risk

Anthropic lost a legal battle to overturn one of the supply-chain risk labels that the US Department of Defense slapped on the company, as a federal appeals court in DC on Friday refused to second-guess the Trump administration.

“The department had ample support for its conclusion that the continued integration of Claude into the department’s information systems, by the department or its contractors, presented a statutorily covered national-security risk,” the judges wrote in a majority opinion. “As Anthropic admits, the company encodes restrictions into Claude that prevent the model from performing tasks that Anthropic wishes to prevent.”

Anthropic spokesperson Danielle Cohen says the company remains confident in its position and is considering all options. That could include appealing to a broader panel of the DC Circuit Court of Appeals or the US Supreme Court.

Earlier this year, the Pentagon sanctioned Anthropic under a pair of separate supply-chain laws to remove the company’s Claude AI models from the military and other parts of the federal government by this month. Anthropic executives have said that the company would not allow the government to deploy its current AI models to support autonomous weapons or domestic surveillance. Secretary of Defense Pete Hegseth deemed the stance a significant national security risk.

The laws designating Anthropic had to be challenged in separate courts. A federal judge in San Francisco tossed out one of the supply-chain risk labels in March and confirmed that decision last month, but Friday's ruling means the other one will stay in place indefinitely, meaning the Pentagon’s blocking of Anthropic can continue. Both rulings face the prospect of years of appeals before being fully resolved.

During a hearing ahead of their ruling, the three judges on the panel challenged both Anthropic and the US government on their arguments and appeared divided on how to rule on blocking the designation completely. The final decision came in 2-1.