A federal appeals court in Washington, D.C., on Friday upheld the Pentagon’s blacklisting of Anthropic, a blow to the artificial intelligence company in its months-long battle with the Trump administration.
In a 2-1 decision, Circuit Judge Gregory Katsas and Circuit Judge Neomi Rao rejected Anthropic’s argument that the Department of Defense’s ban on its Claude models was arbitrary, unauthorized and unconstitutional. Circuit Judge Karen LeCraft Henderson dissented.
“The Department had ample support for its conclusion that the continued integration of Claude into the Department’s information systems, by the Department or its contractors, presented a statutorily covered national-security risk,” Katsas wrote in the opinion for the court.
In March, the DOD labeled Anthropic a supply chain risk, meaning the company purportedly threatened U.S. national security, after negotiations about how the military could use its Claude AI models spiraled out of control. The designation prevents the U.S. military from using Anthropic’s models and blocks defense contractors from using them in their work with the agency.
Anthropic sued the Trump administration in San Francisco and Washington, D.C., an effort to reverse its blacklisting. The DOD relied on two distinct designations to justify its supply chain risk action, which meant they had to be litigated in two separate courts.
A San Francisco federal judge ruled last month that one designation was illegal, but the D.C. appeals court upheld the second designation on Friday.
“We respectfully disagree with the court’s decision,” an Anthropic spokesperson told CNBC in a statement. “Another federal court has already held the government’s parallel designation unlawful. We remain confident in our position and are considering all options, including further review.”
The appellate panel said it would delay the decision from taking immediate effect to give Anthropic time to petition the same panel for a rehearing or to seek an en banc rehearing of the case, by all of the judges on the D.C. Circuit Court of Appeals. Anthropic could also ask the Supreme Court to take the case.
Before the clash between the two sides spilled into the public’s view earlier this year, Anthropic served as an early partner across many U.S. agencies, including the DOD. Anthropic signed a $200 million contract with the Pentagon in July of 2025, but as the company began negotiating Claude’s deployment on the DOD’s GenAI.mil AI platform that September, talks collapsed.
The DOD wanted Anthropic to grant the Pentagon unfettered access to its models across all lawful purposes, while Anthropic wanted assurance that its technology would not be used for fully autonomous weapons or domestic mass surveillance.
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