Appeals court upholds Pentagon’s Anthropic designation
A federal appeals court in Washington, D.C., on September 25 upheld the Pentagon’s designation of Anthropic as a supply-chain risk. The 2-1 decision supports restrictions on the military’s use of Anthropic’s Claude artificial intelligence models and on defense contractors’ use of them for Pentagon work.
Anthropic argued that the designation was arbitrary, beyond the Defense Department’s authority and unconstitutional. Writing for the majority, Judge Gregory Katsas said the department had sufficient grounds to conclude that continued integration of Claude into its systems presented a national-security risk covered by law. Judge Neomi Rao joined the opinion; Judge Karen LeCraft Henderson dissented.
The dispute followed unsuccessful negotiations over how the Pentagon could deploy Claude. Anthropic sought assurances that its technology would not be used for fully autonomous weapons or domestic mass surveillance. The department wanted access to the models for all lawful purposes. Anthropic had signed a $200 million Pentagon contract in July 2025.
The company challenged the government’s action in two courts because the department relied on separate legal designations. In August, a federal judge in San Francisco found one designation unlawful. The D.C. appeals court’s ruling upheld the other, addressing a different legal basis for the Pentagon’s restrictions.
Anthropic said it disagreed with the appeals court and was considering further review. The panel delayed its decision from taking immediate effect, giving the company time to request a rehearing before the panel or the full appeals court. Anthropic could also seek review by the Supreme Court.
Katsas wrote that decisions about balancing the risks of deploying potentially constrained AI models belonged to the president and the defense secretary. Anthropic disputed the government’s concerns, including the possibility that Claude could stop functioning unexpectedly or be manipulated. The rulings address separate designations, leaving the legal dispute over the restrictions unresolved.