A three-judge panel on the U.S. Court of Appeals for the D.C. Circuit refused Anthropic’s emergency request to pause a Department of Defense designation that labels the company a national security supply-chain risk. The order (No. 26-01049) leaves in place part of the Pentagon’s determination and related limits on contractors’ use of Anthropic’s models.
The panel concluded the government’s interest in controlling how it secures AI technology during active military conflict outweighs Anthropic’s asserted financial and reputational harms. The judges wrote that “the equitable balance here cuts in favor of the government,” pointing to “a relatively contained risk of financial harm to a single private company” versus the risks of judicially micromanaging how the Department of War secures vital AI technology.
The designation — never before applied to a U.S. company — bars contractors working with the Pentagon from using Anthropic’s AI and may discourage other firms from resisting government demands. The dispute began after a July 2025 agreement that would have approved Anthropic’s Claude for classified networks. Negotiations collapsed in February when the government sought to renegotiate terms and to expand military uses of Claude beyond limits Anthropic insisted on. Anthropic had opposed using its models for lethal autonomous weapons or mass domestic surveillance of Americans.
In late February, President Donald Trump directed federal agencies to stop using Anthropic products, calling the company’s stance a “disastrous mistake trying to strong-arm the Department of War.” Anthropic sued in March, alleging the designation and related actions were unlawful retaliation. In late March, the U.S. District Court for the Northern District of California issued a preliminary injunction that temporarily blocked the Pentagon’s designation and paused the president’s directive, calling the administration’s action “Orwellian.”
Because federal procurement challenges can proceed on both constitutional and statutory tracks, Anthropic has pursued parallel litigation: a constitutional challenge in the California district court and a statutory challenge in the D.C. Circuit under the law 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 it declined to halt the designation at this time.
Acting U.S. Attorney General Todd Blanche described the ruling as “a resounding victory for military readiness,” tweeting that authority over military operations belongs to the Commander-in-Chief and the Department of War, not a private tech firm.
The decision keeps significant questions unresolved. Further litigation is expected, and the case may set important precedents for how courts weigh company harms against national security prerogatives and for how the government controls access to sensitive AI systems during conflict.