Appeals court upholds Pentagon designation, Claude stays out of US government systems

A federal appeals court in Washington, DC ruled 2-1 on September 25 to uphold the Defense Department's designation of Anthropic as a supply-chain risk, allowing the Pentagon to keep excluding Claude from military and federal systems.

The dispute began when Anthropic refused to let the government use its models for autonomous weapons or domestic surveillance, a stance Defense Secretary Pete Hegseth called a national security risk. The majority held that the department excluded the company over a refused contract term, followed proper procedure, and did not violate Anthropic's due process or free speech rights.

Anthropic spokesperson Danielle Cohen said the company remains confident in its position and is considering all options, including a broader panel review or an appeal to the Supreme Court. A federal judge in San Francisco had already tossed out a separate designation in March, and both rulings face years of appeals. Anthropic said it lost revenue after the designations but has not updated the figure; it still reports growing sales and is preparing for a potential IPO later this year.