Federal Court Rules Against Anthropic in Pentagon AI Ban Case

TLDR

• The U.S. Court of Appeals for the D.C. Circuit ruled 2-1 to maintain the Pentagon’s restrictions on Anthropic.
• In March 2026, the Defense Department classified Anthropic as a supply chain security threat.
• The decision maintains restrictions preventing Claude AI from being deployed in military systems or by Pentagon contractors.
• The majority opinion dismissed Anthropic’s arguments that the restrictions violated constitutional protections and lacked proper justification.
• The AI company is evaluating additional legal remedies, potentially including an appeal to the nation’s highest court.

The U.S. Court of Appeals for the District of Columbia Circuit delivered a decision Friday upholding the Department of Defense’s blacklisting of Anthropic, maintaining existing restrictions on the AI company’s access to military systems.

The three-judge panel split 2-1 in favor of the government. Judges Gregory Katsas and Neomi Rao comprised the majority, while Judge Karen LeCraft Henderson issued a dissenting opinion.

At the heart of the legal dispute is a March designation by the Department of Defense classifying Anthropic as a “supply chain risk.” This classification typically applies to entities with connections to hostile foreign nations.

Under this designation, Pentagon systems are prohibited from utilizing Anthropic’s Claude AI models. Additionally, contractors performing defense-related work cannot employ Claude technology in projects involving the military.

Origins of the Legal Battle

Before the conflict, Anthropic maintained partnerships with multiple federal agencies, including the military. A $200 million agreement with the Defense Department was executed in July 2025.

Negotiations collapsed by September. Military leadership demanded unrestricted access to Claude for “all lawful purposes.” The company sought to impose restrictions, particularly concerning autonomous weapons systems and domestic monitoring activities.

The parties reached an impasse. Defense Secretary Pete Hegseth characterized Anthropic’s position as attempting to exercise veto authority over military operations.

In his opinion, Judge Katsas referenced Hegseth’s concerns regarding potential unexpected AI system failures. He also highlighted risks of Claude being subject to external manipulation. The company has disputed these assertions.

Katsas emphasized that decisions involving such security tradeoffs rest with executive branch leadership, not judicial oversight.

Anthropic’s Legal Path Forward

Earlier this year, Anthropic initiated legal proceedings in two separate federal venues. One complaint was lodged in San Francisco, while another was brought before the D.C. Circuit.

Last month, a San Francisco judge determined that one component of the Pentagon’s classification violated legal standards. That decision stands independently from Friday’s ruling and remains uncontested by federal authorities.

Friday’s decision validated a separate designation employed by the Defense Department. Since the two classifications rest on distinct legal foundations, the D.C. court’s judgment did not nullify the California court’s findings.

The practical result is that Anthropic retains limited ability to collaborate with certain federal entities and contractors under the California ruling. However, Pentagon restrictions remain fully enforced.

Following the announcement, Anthropic issued a formal response. A company representative expressed disagreement with the court’s determination.

“Another federal court has already held the government’s parallel designation unlawful,” the spokesperson said. “We remain confident in our position and are considering all options, including further review.”

The court provided Anthropic with a window before the decision becomes fully operative. The company may petition for reconsideration by the same three-judge panel. Alternatively, it can seek review by the entire D.C. Circuit bench in what’s termed an en banc hearing.

A petition to the Supreme Court represents another avenue.

Relations between Anthropic and the current administration have deteriorated over recent months. President Trump has publicly criticized Anthropic CEO Dario Amodei through multiple social media posts.

Pentagon Undersecretary Emil Michael responded to Friday’s ruling with approval on social media. His post emphasized that the outcome ensures private corporations cannot influence military operational decisions.

Anthropic has not yet announced which appellate strategy it intends to follow.

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