A federal appeals court in Washington, D.C., has upheld the Pentagon's decision to blacklist Anthropic, keeping the company's Claude AI models banned from Pentagon systems and blocking defense contractors from using them in work for the Department of Defense.

The ruling was issued Friday by the U.S. Court of Appeals for the District of Columbia Circuit. The panel voted 2-1 against Anthropic, with Judges Gregory Katsas and Neomi Rao forming the majority and Judge Karen LeCraft Henderson dissenting. The decision rejected Anthropic's claim that the ban was unconstitutional and arbitrary.

News of the ruling, reported Friday by CNN, spread quickly on social media, including this post on X:

🚨BREAKING: Claude is officially a NATIONAL SECURITY THREAT and is BLACKLISTED from the ENTIRE defense supply chain
>anthropic: no autonomous weapons, no mass surveillance, no exceptions
>pentagon blacklists claude as an active national security threat
>anthropic sues Federal… pic.twitter.com/eLS8G1cRIj
— NIK (@ns123abc) September 25, 2026

https://x.com/ns123abc/status/2103584399103041737?ref_src=twsrc%5Etfw

The blacklist stems from the collapse of contract negotiations between Anthropic and the Defense Department over the military's use of Claude. The designation now survives the company's constitutional challenge, though Anthropic says it is weighing further legal options, including a possible appeal to the Supreme Court.

How the Dispute Started

The case centers on a March 2026 decision in which the Department of Defense designated Anthropic a “supply chain risk,” a label usually reserved for companies tied to foreign adversaries. The designation means the U.S. military cannot use Anthropic's Claude models, and it also stops defense contractors from using Claude in their work with the Pentagon.

Anthropic had been working with several U.S. agencies, including the Pentagon. In July 2025, the company signed a $200 million contract with the Department of Defense. Talks broke down that September: the Pentagon wanted full access to Claude for “all lawful purposes,” while Anthropic insisted on limits, including rules against autonomous weapons and domestic surveillance. The two sides could not reach an agreement. The breakdown turned a contract negotiation into a legal test of who sets the boundaries for military AI use — the vendor selling the model or the government deploying it.

Defense Secretary Pete Hegseth accused Anthropic of trying to hold veto power over military decisions. Writing for the majority, Judge Katsas said Hegseth raised concerns about AI models shutting down unexpectedly and cited worries that Claude could be manipulated — claims Anthropic has denied. Katsas wrote that the final call on these tradeoffs belongs to the president and the defense secretary, not the courts.

Parallel Cases in Two Courts

Anthropic sued the government in two separate courts earlier this year, filing one case in San Francisco and another in the D.C. Circuit. A judge in San Francisco ruled last month that one part of the Pentagon's designation was illegal. That ruling is separate from Friday's and has not been appealed by the government.

Friday's ruling upheld the second designation used by the Pentagon. Because the two designations rely on different legal grounds, the D.C. court's ruling did not cancel out the California ruling. As a result, Anthropic can still work with some government agencies and contractors under the California decision, but the Pentagon ban remains in place.

What Happens Next for Anthropic

Anthropic released a statement after the ruling. A spokesperson said the company disagrees with the decision.

“Another federal court has already held the government's parallel designation unlawful,” the spokesperson said. “We remain confident in our position and are considering all options, including further review.”

The appeals panel gave Anthropic time before the ruling takes full effect. The company can ask for a rehearing by the same panel, request a rehearing before the full D.C. Circuit in what is known as an en banc hearing, or take the case to the Supreme Court. Anthropic has not said which legal option it will pursue next.

The relationship between Anthropic and the Trump administration has been tense for months. President Trump has criticized Anthropic CEO Dario Amodei on social media several times. On Friday, Pentagon Undersecretary Emil Michael celebrated the ruling on social media, writing that the decision means no private company will interfere with military decision-making.

Source: CoinCentral