The D.C. appeals court split 2-1, with Circuit Judge Gregory Katsas and Circuit Judge Neomi Rao in the majority and Circuit Judge Karen LeCraft Henderson dissenting. Writing for the court, Katsas said, "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."
In March, the Pentagon tagged Anthropic as a supply chain risk after negotiations over how the military could use Claude AI models fell apart. That designation blocks defense contractors from deploying Anthropic's technology in work for the department and was premised on the view that involving the company could present a potential threat to U.S. national security.
Anthropic has been fighting the Trump administration in two courts because the Defense Department used two separate legal designations to support its action, requiring split litigation. A federal judge in San Francisco ruled last month that one of those designations was unlawful, while the D.C. panel kept the other in place on Friday. "We respectfully disagree with the court's decision," an Anthropic spokesperson told CNBC. "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."
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This is a reminder that headline risk around AI and defense can swing quickly, even for top names. Government labels can shut doors for contractors overnight, and court outcomes can split by venue. If you follow AI or defense exposure in your portfolio, keep an eye on how legal and procurement decisions ripple through who gets to sell into federal pipelines and who is sidelined.
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