U.S. appeals court upholds designation of Anthropic as supply chain risk

A federal appeals court in Washington, D.C. upheld the Pentagon’s designation of Anthropic as a supply-chain risk, rejecting the company’s challenge to the Department of Defense ban on its Claude AI models in a 2-1 decision. Circuit Judges Gregory Katsas and Neomi Rao found the DoD had sufficient basis to conclude that continued integration of Claude into the Department’s information systems posed a statutorily covered national-security risk; Circuit Judge Karen LeCraft Henderson dissented. The ruling leaves in place a prohibition on the military’s use of Anthropic’s models and blocks defense contractors from employing them in work for the agency.

The supply-chain-risk label dates to March, after negotiations over how the military could use Claude deteriorated, and the DoD invoked two separate designations to justify the blacklist. Anthropic sued in both San Francisco and D.C.; a San Francisco judge recently struck down one of the parallel designations, but the D.C. appeals court upheld the other, preserving substantial restrictions on Anthropic’s access to defense business. Anthropic said it disagrees with the appeals court outcome, pointed to the conflicting federal ruling, and is considering further legal options, including additional review.