A federal appeals court in Washington, D.C., on Friday upheld the Pentagon's blacklisting of Anthropic, handing the artificial intelligence company a significant setback in its months-long legal battle with the Trump administration over the military use of its Claude models.
In a 2-1 decision, a panel of the U.S. Court of Appeals for the District of Columbia rejected Anthropic's argument that the Department of Defense's ban was arbitrary, unauthorized and unconstitutional. The majority said the Pentagon had sufficient grounds to conclude that allowing Claude to remain integrated into the department's systems posed a national-security threat covered by statute.
"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," Judge Gregory Katsas wrote in the majority opinion. Judge Neomi Rao joined the ruling. Both were appointed by President Donald Trump. Judge Karen LeCraft Henderson, appointed by former President George H.W. Bush, dissented.
The decision preserves the Defense Department's designation of Anthropic as a supply chain risk, a label that bars the U.S. military from using the company's models and prevents defense contractors from using them in work tied to the agency. The designation was imposed in March after negotiations over how the military could use Claude reportedly broke down.
Anthropic has argued that the government overreached and that the blacklisting was not only legally flawed but also damaging to a company that had previously worked closely with U.S. agencies. In a statement after Friday's ruling, an Anthropic spokesperson said, "We respectfully disagree with the court's decision. 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 appeals panel delayed the effect of its ruling, giving Anthropic time to seek a rehearing from the same panel, request an en banc review by the full D.C. Circuit, or petition the Supreme Court to take up the case.
The legal fight has unfolded against a backdrop of increasingly hostile relations between Anthropic and the Trump administration. Trump has repeatedly criticized Anthropic chief executive Dario Amodei on social media, and the company's relationship with the White House has deteriorated further in recent months. Amodei recently drew Trump's ire after calling for an industry-wide slowdown, and he was notably absent from the state dinner the White House hosted for Chinese President Xi Jinping on Thursday.
On Monday, Trump posted on Truth Social: "The Trump Administration has stopped AI 'people' from doing bad, or potentially bad, 'things,' like Dario (Anthropic!), who is now pretending to be a 'perfect little angel' - and we will continue to do so!"
Anthropic's dispute with the Pentagon began after what had once been a promising partnership. Before the conflict became public, the company had served as an early partner to several U.S. agencies, including the Defense Department. Anthropic signed a $200 million contract with the Pentagon in July 2025, underscoring the extent to which the company had been positioned as a serious government AI supplier.
But by September, as the company negotiated deployment of Claude on the DOD's GenAI.mil platform, talks collapsed. According to the source material, the Pentagon wanted Anthropic to grant the military unfettered access to its models for all lawful purposes, while Anthropic sought assurances that its technology would not be used in ways it considered unacceptable. That breakdown ultimately fed into the blacklisting that followed.
The company sued the Trump administration in both U.S. District Court in San Francisco and in the D.C. Circuit Appeals Court in March, challenging separate designations the Pentagon used to justify its supply chain risk action. Because the DOD relied on two distinct legal bases, the disputes were litigated in two courts.
That split has already produced mixed results. A San Francisco federal judge ruled last month that one of the designations was illegal. Friday's ruling in Washington, however, upheld the second designation, leaving Anthropic with only partial relief and the prospect of continued litigation.
The case carries broader implications beyond one company's access to military contracts. It highlights the growing tension between the U.S. government's desire to control how advanced AI systems are deployed in sensitive settings and the industry's push to preserve commercial autonomy over model use. It also underscores how quickly AI vendors can move from favored partners to national-security risks when policy, politics and procurement collide.
For Anthropic, the ruling is both a legal and strategic setback. The company remains locked out of Pentagon use cases for now, and the dispute threatens to complicate its efforts to expand within the federal government at a time when AI firms are racing to secure public-sector footholds. With the court allowing time for further appeals, the fight is far from over, but Friday's decision gives the Defense Department a powerful early victory in a case that could help define the boundaries of AI adoption inside the U.S. national-security apparatus.