US Appeals Court Backs Pentagon's Supply Chain Risk Label on Anthropic

A federal appeals court in Washington on Friday declined to overturn the government's designation of AI developer Anthropic as a supply chain risk, handing the Pentagon a win in its ongoing dispute with the company.

The U.S. Court of Appeals for the District of Columbia Circuit ruled 2-1 in favour of the Defence Department, clearing the way for it to continue stripping Anthropic's Claude models from its systems and to bar the use of the company's products for departmental work.

Writing for the majority, Judge Gregory G. Katsas said the department had reasonable grounds for concern that Anthropic might alter Claude's design to block it from carrying out national-security functions that the Pentagon considers contractually authorised and necessary.

The standoff dates back to February, when President Donald Trump and Defence Secretary Pete Hegseth accused Anthropic of jeopardising national security and formally labelled it a supply chain risk. Anthropic chief executive Dario Amodei refused to yield, citing fears that the company's products could be turned to mass surveillance or autonomous armed drones.

The D.C. ruling is distinct from a decision handed down this summer by a federal judge in California, who found that the Pentagon had acted illegally by penalising the AI company over its criticism of the department's stance on AI use. The Washington case, filed earlier this year, centred on a separate rule the Pentagon invoked in seeking to brand Anthropic a supply chain risk.

An Anthropic spokesperson said the company "respectfully disagrees" with the appeals court's decision, noting that another federal court had already found the government's parallel designation unlawful. The company said it remains confident in its position and is weighing all options, including further review.

The White House did not immediately respond to a request for comment.