“The Department had ample support for its conclusion that the continued integration of Claude into the Department’s information systems, by the Department or its contractors, presented a statutorily covered national-security risk,” Katsas wrote.
The decision keeps Claude out of Defense Department information systems and prevents contractors from using Anthropic’s models for work performed for the agency. The dispute stems from negotiations over how the military could deploy Claude and what restrictions Anthropic could maintain on its use.
Anthropic had previously worked with the Pentagon, including through a $200 million agreement signed in July 2025. But negotiations over Claude’s deployment later broke down after the company sought to preserve restrictions involving fully autonomous weapons and domestic mass surveillance. The Pentagon wanted broader access to the models for lawful military purposes.
The D.C. Circuit concluded that the department was entitled to treat those restrictions as a potential supply-chain concern. The court noted that Anthropic builds safeguards directly into Claude and that those restrictions had previously prevented the model from carrying out some requests from government users.
Katsas also pointed to uncertainty over whether Anthropic’s contractual limits could interfere with Claude’s availability during military operations. Anthropic disputed the government’s assessment, but the majority held that the Pentagon’s decision fell within the authority granted by the relevant supply-chain security law.
“In our Republic, it is the President and the Secretary of War who must determine how best to balance the competing risks,” Katsas wrote. “In doing so here, the Secretary did not transgress any limits on his authority under the Supply Chain Security Act or the Constitution.”
The ruling does not resolve every part of Anthropic’s legal fight with the government. The Defense Department relied on two separate designations in taking action against the company, leading Anthropic to challenge them in different courts.
Last month, a federal judge in San Francisco ruled that the parallel designation at issue in that case was unlawful. Friday’s D.C. Circuit decision upheld the other action, meaning the Pentagon’s restrictions on Anthropic remain in effect despite the different outcome in California.
Anthropic said it disagreed with the appeals court’s ruling and emphasized that another federal court had already rejected the government’s related action.
“We respectfully disagree with the court’s decision,” an Anthropic spokesperson said. “Another federal court has already held the government’s parallel designation unlawful. We remain confident in our position and are considering all options, including further review.”
The D.C. Circuit is delaying the ruling from immediately taking effect so Anthropic can seek another hearing. The company could ask the same panel to reconsider the case, request review by the full D.C. Circuit or pursue an appeal to the Supreme Court.
For now, the result preserves the Pentagon’s ability to exclude Claude from its systems and from work performed by its contractors. It also leaves Anthropic in the unusual position of having won one federal challenge to the government’s actions while losing another tied to the same broader dispute.
This analysis is based on reporting from CNBC.
Image courtesy of Unsplash.
This article was generated with AI assistance and reviewed for accuracy and quality.
