Appeals Court Greenlights Pentagon's Anthropic Supply Chain Label

A federal appeals court ruled 2-1 on Friday that the Pentagon may continue treating Anthropic as a supply chain risk, rejecting the AI lab's challenge and clearing the way for the Defense Department to strip Claude models from its systems.

The U.S. Court of Appeals for the District of Columbia Circuit sided with the Pentagon. Judge Gregory G. Katsas, writing for the majority, said the department had a reasoned basis for its designation.

"The Department reasonably feared that Anthropic might manipulate Claude's design to prevent it from performing national-security functions that the Department deems contractually authorized and necessary," Katsas wrote.

The decision allows the Pentagon to keep removing Claude models from its systems and to bar the use of Anthropic products for Defense Department work.

The fight started in February. President Donald Trump and Defense Secretary Pete Hegseth accused Anthropic of endangering national security and designated the company a supply chain risk. Anthropic CEO Dario Amodei refused to back down. His concern: the company's products could be used for mass surveillance or autonomous armed drones.

Friday's ruling is separate from a decision a federal judge in California made this summer. That judge found the Pentagon acted illegally by punishing Anthropic for its criticism of the Pentagon's views on AI use. The Washington, D.C., case addressed a different rule the Pentagon was using to try to declare the company a supply chain risk.

An Anthropic spokesperson said the company "respectfully disagrees" with the appeals court's decision.

"Another federal court has already held the government's parallel designation unlawful," the spokesperson said in a statement. "We remain confident in our position and are considering all options, including further review."

The White House did not immediately respond to a request for comment.

Anthropic now faces a split legal record: one court has struck down the Pentagon's designation as unlawful retaliation, while another has upheld the department's use of a separate rule. With the company weighing further review, the conflict over whether an AI vendor can refuse national-security work on safety grounds is heading toward a higher-stakes legal showdown.