The US Court of Appeals for the DC Circuit refused Anthropic’s emergency request to pause a Department of Defense designation that labels the company a national security supply-chain risk.
A three-judge panel denied the stay, finding the government’s interest in controlling how it secures AI technology during active military conflict outweighed any financial or reputational harm Anthropic might suffer. The order (case No. 26-01049) leaves in place part of the Pentagon’s official determination and the related limits on contractors’ use of Anthropic’s models.
The designation — never before applied to an American company — prevents contractors who work with the Pentagon from using Anthropic’s AI and could chill other firms that resist government demands. “In our view, the equitable balance here cuts in favor of the government,” the panel wrote, noting “a relatively contained risk of financial harm to a single private company” versus “judicial management of how, and through whom, the Department of War secures vital AI technology during an active military conflict.”
The dispute traces to a July 2025 agreement to make Anthropic’s Claude the first large language model approved for classified networks. Negotiations collapsed in February after the government pushed to renegotiate terms and required broader military use of Claude without Anthropic’s restrictions. Anthropic opposed using its technology for lethal autonomous weapons or mass domestic surveillance of Americans.
In late February, President Donald Trump ordered federal agencies to stop using Anthropic products, calling the company’s actions a “disastrous mistake trying to strong-arm the Department of War.” Anthropic sued the administration in March, characterizing the designation as unlawful retaliation. In late March, the US District Court for the Northern District of California issued a preliminary injunction temporarily blocking the Pentagon’s designation and pausing the president’s directive, calling it “Orwellian.”
Because federal procurement law channels challenges under both constitutional and statutory tracks, Anthropic has litigated in two courts: the California district court on constitutional grounds and the D.C. Circuit under the statute the Pentagon used to make the designation. The appeals court acknowledged Anthropic will “likely suffer some degree of irreparable harm absent a stay” and said “substantial expedition is warranted,” but declined to halt the designation now.
Acting US Attorney General Todd Blanche called the ruling “a resounding victory for military readiness,” tweeting that military authority and operational control belong to the Commander-in-Chief and Department of War, not a tech company.
The case leaves open additional litigation and could set precedents on how the government controls access to sensitive AI systems during conflict and how courts balance company harms against national security prerogatives.