A federal appeals court in Washington D.C. has denied a request from artificial intelligence company Anthropic to temporarily stop the Pentagon’s national security blacklisting while legal proceedings continue, delivering a victory for the Trump administration on Wednesday.
The company behind the widely-used Claude AI assistant argues that Defense Secretary Pete Hegseth exceeded his legal authority when he labeled Anthropic as a national security supply-chain threat. This classification prevents the company from securing Pentagon contracts and may lead to a government-wide ban.
Company leadership has stated the designation threatens to eliminate billions in potential revenue and severely damage their reputation in the marketplace.
The three-judge panel from the U.S. Court of Appeals for the District of Columbia Circuit rejected Anthropic’s emergency request to suspend the designation during litigation. Wednesday’s ruling does not represent a final decision on the merits of the case.
This legal battle represents one of two separate lawsuits Anthropic has initiated challenging Hegseth’s unprecedented action, which followed the company’s refusal to permit military applications of Claude for U.S. surveillance operations or autonomous weapon systems due to ethical and safety considerations.
Hegseth implemented the designations using two distinct legal authorities, prompting Anthropic to file separate challenges against each order.
On March 26, a federal judge in California temporarily blocked one of the orders, determining the Pentagon appeared to have illegally punished Anthropic for its positions on AI safety protocols.
This marks the first instance of a domestic company being publicly classified as a supply-chain security threat under rarely-used government procurement regulations designed to shield military systems from foreign interference or sabotage.
In their court filings, Anthropic contends the government violated their First Amendment free speech protections by retaliating against their AI safety stance. The company also claims they were denied the opportunity to challenge their designation, violating their Fifth Amendment due process rights.
The legal documents characterize the designations as unlawful, lacking factual foundation, and contradicting the military’s previous positive assessments of Claude’s capabilities.
According to court documents, the Justice Department maintains that Anthropic’s unwillingness to remove usage restrictions could create operational uncertainty for the Pentagon regarding Claude’s deployment and potentially compromise military systems during critical operations.
Government officials assert their decision resulted from Anthropic’s rejection of contractual requirements, not from the company’s AI safety positions.
The D.C. case involves legislation that could expand the blacklist to encompass broader civilian government agencies following an interagency review process.
Meanwhile, the California case addresses more limited statutory authority that specifically bars Anthropic from Pentagon contracts involving military information systems.
