Federal appeals court in Washington, DC, denies Anthropic request to pause Pentagon blacklisting as lawsuit proceeds

A federal appeals court in Washington, DC, rejected Anthropic’s request to temporarily block the Pentagon’s blacklisting of its AI technology while the company’s lawsuit against the Department of War proceeds. The San Francisco-based AI firm is challenging its designation as a supply-chain risk, which it says was retaliation after Anthropic sought to limit government use of its technology for mass surveillance and weaponry.

Court rulings leave Anthropic sidelined from Pentagon work

In its decision on Wednesday, the appeals court said, “In our view, the equitable balance here cuts in favor of the government.” The court also stated that Anthropic “will likely suffer some degree of irreparable harm absent a stay,” but characterized its concerns as “primarily financial in nature.”

The appeals court further said Anthropic did not demonstrate that its speech had been chilled during the litigation. At the same time, it said “substantial expedition is warranted” because of the financial harm the company faces while the case continues.

Earlier, a judge in San Francisco federal court granted Anthropic a preliminary injunction last month. After the split rulings, Anthropic is unable to work with the Department of War, and other defense contractors are barred from using its Claude chatbot in Pentagon-related work. Anthropic can still work with other government agencies, and defense contractors may use Claude outside their interactions with the Pentagon.

Statements from Anthropic and the Justice Department

An Anthropic spokesperson said the company was “grateful the court recognized these issues need to be resolved quickly” and added that it remains confident the courts will ultimately agree the supply-chain designations were unlawful.

Acting US Attorney General Todd Blanche called the appeals court decision a “resounding victory,” writing that “Military authority and operational control belong to the Commander-in-Chief and Department of War, not a tech company.” The Pentagon declined to comment.

Contract and supply-chain designation details

Anthropic signed a $200 million contract with the Department of War in July, making it the sole provider of AI models on the government’s classified networks. The company is suing over the supply-chain risk designation.

According to the article, negotiations deteriorated after War Secretary Pete Hegseth criticized Anthropic for seeking exemptions that would limit use of its models for mass surveillance of citizens and weaponry. Hegseth argued the Pentagon should have “free rein” over the tools “for all lawful purposes.”

The supply-chain risk label, the article says, was previously reserved for foreign businesses that pose national security threats, including Chinese firm Huawei Technologies. If the designation remains, defense contractors would be required to prove they do not use Anthropic’s AI models in their work with the military.

Background: leaked communications and broader political tensions

The article links the dispute to heightened tensions after a leaked 1,600-word missive from Anthropic CEO Dario Amodei that criticized the Trump administration. It also reports that Amodei apologized for his “tone” in the leaked message.

In the missive, the executive accused the Pentagon of targeting Anthropic for not providing “dictator-style praise to Trump.” The article also notes that during a March tech conference, Sam Altman criticized Amodei, saying it is “bad for society” if companies abandon commitments to the democratic process because “some people don’t like the person or people currently in charge.”