The D.C. Circuit Court of Appeals on September 25 upheld the Pentagon's designation of Anthropic as a supply chain risk, sustaining a ban that bars the U.S. military and defense contractors from using the company's Claude models1,2.
Circuit Judge Gregory Katsas and Circuit Judge Neomi Rao rejected Anthropic's argument that DOD's ban on Claude was arbitrary, unauthorized, and unconstitutional. Circuit Judge Karen LeCraft Henderson dissented. The court found that DOD "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".
Competing risks, competing rulings
The ruling frames the dispute in stark terms. The court said the case "raises profoundly difficult questions about the appropriate military uses of an almost unimaginably powerful new technology"3. The government "raises the deeply sobering prospect of overly constrained AI models shutting down unexpectedly and thus causing important military operations to fail," while "Anthropic raises the deeply sobering prospect of unconstrained AI models hallucinating inappropriate targets for lethal military force". The court said The Trump administration and Defense Secretary Pete Hegseth "must determine how best to balance the competing risks".
Judges decided the U.S. had authority to blacklist Anthropic for withholding certain AI features even if Anthropic had no malicious intent. The court held that the Secretary "did not transgress any limits on his authority under the Supply Chain Security Act or the Constitution" and denied the petitions for review.
DOD labeled Anthropic a supply chain risk in March. Anthropic sued The Trump administration in an effort to undo that designation. The same court previously denied Anthropic's emergency motion for a stay in April.
A split legal landscape
The decision arrives roughly a month after another federal court ruled that the ban is illegal. The diverging outcomes stem from the fact that the matter is governed by two different pieces of legislation. ANALYSIS The conflicting rulings across jurisdictions leave the legal status of the Pentagon's Claude ban unresolved, raising the likelihood of further litigation.
The designation prevents the U.S. military from using Anthropic's models and blocks defense contractors from incorporating them in agency work.
"We remain confident in our position and are considering all options, including further review," an Anthropic spokesperson said.