A US federal appeals court has ruled that the Department of Defense can lawfully bar Anthropic's artificial intelligence technology from military use, handing a significant legal setback to the AI company in its dispute with the Trump administration.
The ruling
In a 2-1 decision on Friday, the US Court of Appeals for the District of Columbia Circuit upheld the Pentagon's designation of Anthropic as a "supply chain risk" under the Federal Acquisition Supply Chain Security Act (FASCA). The ruling lets the department continue barring federal agencies and military contractors from using Anthropic's Claude models on its systems.
Circuit Judge Gregory Katsas, writing for the majority, found the department had "ample support" for its concern that continued use of Claude posed a national security risk — specifically, that Anthropic might design its models in a way that prevents them from performing national-security functions the department considers contractually necessary. Judge Neomi Rao joined the majority.
First Amendment claim rejected
The court rejected Anthropic's First Amendment argument, concluding the exclusion stemmed from the company's refusal to accept a specific contract term, not from its public advocacy for stronger AI regulation. Judge Karen LeCraft Henderson dissented, arguing the government had interpreted the underlying statute too broadly.
How the dispute began
The conflict dates to earlier this year, when Anthropic declined a Pentagon request to allow its AI to be used for "all lawful purposes," citing the company's restrictions against enabling autonomous weapons systems and mass surveillance of US citizens. The Trump administration designated Anthropic a supply chain risk in March 2026, cutting off its access to defence-related federal business.
A nuance worth noting: the Pentagon relied on two separate designations, litigated in two courts at once. In August 2026, a federal judge in San Francisco struck down one of them, ruling the administration had acted in retaliation against Anthropic. Friday's DC Circuit ruling addressed the second, separate designation on different statutory grounds.
An Anthropic spokesperson said the company "respectfully disagrees" and is weighing its options, including asking the full DC Circuit to rehear the case or appealing to the Supreme Court. The company has said the blacklisting has already cost it billions of dollars, at a time it is reportedly preparing for a highly anticipated public offering.
Sources:
News247 World Press: Court Rules DoD Can Bar Anthropic AI from Military Use