The US Court of Appeals for the District of Columbia Circuit has rejected a request by AI company Anthropic to temporarily halt the US Defense Department‘s designation of the firm as a national security supply chain risk. A three-judge panel denied the emergency motion on Wednesday, ruling that the government’s interest in controlling how it secures AI technology during active military conflict outweighed any financial or reputational harm the company might face. The decision leaves in place the Pentagon’s official classification of Anthropic’s products as a supply-chain risk to national security.
The designation is notable in that it has never previously been applied to an American company. It also bars Pentagon contractors from using Anthropic’s AI models, a consequence that legal observers say could set a significant precedent for other technology firms that decline to comply with government demands. The three-judge panel wrote that the equitable balance in the case favored the government.
The dispute traces back to a contract negotiated between Anthropic and the Pentagon in July 2025, under which the company’s AI model Claude was set to become the first large language model approved for use on classified military networks. Negotiations broke down in February, however, when the government sought to renegotiate the terms and demanded that Anthropic permit military use of Claude without restrictions. Anthropic refused, maintaining that its technology should not be deployed for lethal autonomous weapons or mass domestic surveillance of Americans.
US President Donald Trump responded in late February by ordering all federal agencies to cease using Anthropic products, stating that the company had made a disastrous mistake by attempting to pressure the Department of War. Anthropic filed a lawsuit against the Trump administration in March, describing the government’s actions as an unlawful campaign of retaliation. The legal battle has since unfolded across two separate court tracks due to the structure of federal procurement law.
Because of how that law is written, Anthropic was required to challenge the designation on two distinct legal fronts — in a California district court on constitutional grounds, and directly before the D.C. Circuit under the specific statute that authorized the designation. In late March, the District Court for the Northern District of California issued a preliminary injunction against the Pentagon over the designation and temporarily blocked Trump’s directive, describing it as Orwellian. Wednesday’s ruling, however, addresses only the D.C. Circuit track.
The appeals court acknowledged in its ruling that Anthropic would likely suffer some degree of irreparable harm without a stay, and noted that substantial expedition of the case was warranted. Despite that acknowledgment, the panel concluded that the government’s interests took precedence. Acting US Attorney General Todd Blanche responded to the decision on social media platform X, calling it a resounding victory for military readiness.
Originally reported by CoinTelegraph.
