A federal appeals court on Friday upheld the Department of Defense’s authority to blacklist Anthropic.
The ruling by the U.S. Court of Appeals for the District of Columbia Circuit maintains a Pentagon ban prohibiting military personnel and defense contractors from using Anthropic’s flagship artificial intelligence (AI) model, Claude.
The dispute stems from a Trump administration order issued earlier this year designating Anthropic a “supply chain risk,” a restrictive classification traditionally reserved for foreign adversaries and never previously applied to a domestic firm.
The mandate required federal agencies and military partners to sever commercial ties with the company after Anthropic refused to grant the military unrestricted license to use its technology for “all lawful purposes.”
Anthropic cited firm ethical boundaries prohibiting its models from being deployed for autonomous weapons or domestic mass surveillance.
Writing for the majority in the 2-1 decision, the D.C. Circuit panel rejected Anthropic’s argument that the blacklisting violated its First Amendment rights, concluding the Pentagon possessed “ample support” for its determination that Anthropic’s restrictions could compromise national security and military chain of command. One judge dissented, arguing the government failed to demonstrate a legitimate risk that Anthropic would manipulate its software.
The decision directly impacts Anthropic’s bottom line by barring military contractors, suppliers, and commercial partners from using paid enterprise versions of Claude.
The financial exposure comes at a critical juncture for the firm, which is relying heavily on enterprise revenues ahead of an anticipated public offering later this year.
Despite the setback, Anthropic retains limited protection from a separate August ruling by a federal court in California, which partially invalidated the administration’s designation and permitted non-defense agencies to continue using its software.
Because the two courts evaluated different statutory authorities, Friday’s decision does not overturn the California injunction, which the government has not appealed.
An Anthropic spokesperson criticized the ruling, emphasizing that “another federal court has already held the government’s parallel designation unlawful,” and confirmed the company is evaluating further legal remedies, including an en banc rehearing before the full D.C. Circuit or an appeal to the U.S. Supreme Court.
Pentagon officials praised the appellate decision. Writing on X, Undersecretary Emil Michael stated that “warfighters will sleep better knowing that no private company will insert their opinions in the chain of command.”
