Anthropic Loses Initial Court Battle Over Pentagon Supply Chain Risk Designation

The U.S. Court of Appeals for the District of Columbia Circuit has rejected Anthropic’s emergency request to pause the Pentagon’s designation of its technology as a national security supply chain risk. The three-judge panel ruled that government interests in controlling the use of AI during active military conflict outweighed potential financial and reputational harm to the company.

In its decision, the court stated that “the equitable balance here cuts in favor of the government,” emphasizing that the risk to national security took priority over the business impact on a single private firm. The designation remains active and prevents contractors working with the Defense Department from using Anthropic’s AI products, marking the first time such a label has been applied to an American technology company.

Dispute Originates From Failed AI Contract Negotiations

The legal dispute began after a July 2025 agreement intended to make Anthropic’s Claude model the first large language model approved for classified government networks. Negotiations collapsed in February when officials demanded unrestricted military access, including potential use in lethal autonomous weapons and domestic surveillance programs, which Anthropic opposed.

President Donald Trump later directed federal agencies to halt the use of Anthropic products. The company responded with lawsuits in multiple courts, including a California ruling that temporarily blocked parts of the directive, while the broader legal challenge continues.

Acting US Attorney General Todd Blanche said on X that ;

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