A U.S. federal appeals court has ruled that the Defense Department acted lawfully when it designated artificial intelligence company Anthropic a "supply chain risk" and restricted dealings with the firm. Under the ruling, Anthropic's AI model Claude remains barred from use inside the Pentagon.
The U.S. Court of Appeals for the District of Columbia Circuit rejected Anthropic's request to void the blacklisting and sided with the government, CNN reported on the 25th.
Other federal agencies outside the Defense Department are still permitted to work with Anthropic, however, under a ruling issued last month by a federal court in California in a separate but similar case. The U.S. government did not appeal that decision.
The Trump administration designated Anthropic a "supply chain risk" in February and ordered all federal agencies and military contractors to halt business with the company. It was the first time the supply chain risk list, previously applied mainly to firms linked to hostile foreign states, had been used against a U.S. company.
The dispute began after Anthropic refused a Defense Department demand that its AI be made available for "all lawful purposes." Anthropic maintains its own red lines restricting the use of its AI for fully autonomous weapons and for mass surveillance of U.S. citizens. Arguing that the government action had no legal basis, the company filed two separate lawsuits in March, one in federal court in California and one with the D.C. appeals court. The California suit named multiple federal agencies including the Defense Department as defendants, while the D.C. case named only the Pentagon.
The D.C. appeals court had already decided in April to leave the Defense Department's supply chain risk sanctions against Anthropic in place for the time being, denying the company's request for an injunction that would have suspended the designation until a ruling on the merits.
In a statement issued shortly after the ruling, an Anthropic spokesperson said another federal court had already found the government's action unlawful and that the company was weighing all legal options, including a petition for en banc review or an appeal to the Supreme Court. The Defense Department welcomed the decision. Emil Michael, the department's chief technology officer, wrote on social media that the hammer of justice had shattered Anthropic's arguments.
