US Appeals Court Upholds Anthropic's Designation as a Supply Chain Risk

⚡ The gist in 5 seconds - A federal appeals court in Washington has upheld the Pentagon's decision to blacklist Anthropic as a supply chain risk. - The ruling was made by a three-judge panel of the DC Circuit in a 2:1 vote. - The designation stands: military and defense contractors remain barred from using Anthropic's models. ### 🔍 What was found On Friday, a panel of the US Court of Appeals for the District of Columbia Circuit rejected Anthropic's lawsuit against the Department of Defense. The company had challenged the Pentagon's March decision to designate it a supply chain risk. Judges Gregory Katsas and Neomi Rao, both appointed by Trump, formed the majority; Judge Karen LeCraft Henderson, appointed by George H.W. Bush, dissented. The ruling states that the Department of Defense had sufficient grounds to consider the integration of Claude models into the agency's information systems a national security threat. Judge Katsas noted in the decision that the Secretary of Defense did not exceed the authority granted by the Supply Chain Security Act and the Constitution. This decision concerns the second of two designations: earlier, a federal court in San Francisco ruled the first designation unlawful, but now the appellate court has upheld the second one. ### 💡 Why it matters The practical consequence is a ban on the Pentagon and defense contractors using Anthropic's models in work with the agency. This sets a precedent for the entire AI industry: the court confirmed that military leadership, not the developer, determines the risk balance when deploying models in defense systems. According to a spokesperson, Anthropic disagrees with the decision, is confident in its position, and is considering further steps, including a rehearing en banc or an appeal to the Supreme Court. For now, the ruling has been held in abeyance to allow the filing of such motions. ### 🧩 Context Before the conflict, Anthropic was an early partner of many US agencies, including the Department of Defense. In July 2025, the company signed a $200 million contract with the Pentagon. When negotiations began in September on deploying Claude on the GenAI.mil platform, the parties failed to agree on terms. The Department of Defense demanded unrestricted access to the models for all lawful purposes, while Anthropic sought guarantees that the technology would not be used for fully autonomous weapons or domestic mass surveillance. Then-Defense Secretary Pete Hegseth accused the company of trying to gain a "veto" over military operational decisions. Judge Katsas also cited concerns that "overly restricted" models could be shut down unpredictably or become subject to manipulation — arguments Anthropic rejected, but the court deemed the leadership's judgment decisive.

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