“The hammer of justice has smashed AnthropicAI[’s] arguments. They are a Supply Chain Risk to the defense industrial base [and] warfighters will sleep better knowing that no private company will insert their opinions in the chain of command,” Pentagon CTO Emil Michael wrote on social media after the ruling.
The D.C. Circuit ruling and its limits
A three-judge panel of the U.S. Court of Appeals for the District of Columbia upheld the Department of Defense’s designation of Anthropic’s products as a “supply chain risk” to national security, a decision that allows the Pentagon to bar use of Anthropic AI across the defense enterprise. The ruling explicitly permits the Defense Department to prohibit not only its own personnel but also private-sector employees who are actively working on defense contracts from using Anthropic products.
That scope is narrower than some headlines imply: the D.C. Circuit decision applies to the Pentagon’s ban and does not affect a separate, parallel federal case in the Northern District of California.
What the judges wrote — majority and dissent
Judge Gregory Katsas wrote for himself and Judge Naomi Rao that “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.” Katsas’ opinion points to Anthropic’s own product design, noting that “the company encodes restrictions into Claude that prevent the model from performing tasks that Anthropic wishes to prevent,” and that “on more than one occasion, these restrictions have stopped Claude from performing tasks requested by government users.”
Judge Karen Henderson dissented. Henderson, an appointee of George H.W. Bush, wrote that she “cannot agree that this is the scenario the Congress had in mind when it enacted FASCSA,” meaning the Federal Acquisition Supply Chain Security Act of 2018, and argued that the Act was enacted to protect against sabotage by malignant foreign powers rather than to police a U.S. company that builds safety and ethics guardrails into its products.
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End the scrambleNorthern District of California decision still standing
The D.C. Circuit ruling leaves intact a separate outcome from the Northern District of California. There, Judge Rita Lin ruled last month against the Trump administration’s attempt to ban Anthropic from all federal contracts. Anthropic cited that California ruling in its response to the appeals court decision: “We respectfully disagree with the court’s decision. Another federal court has already held the government’s parallel designation unlawful,” the company said, adding that it is “considering all options, including further review.”
Appeal options: en banc D.C. Circuit and the Supreme Court
Because the Defense Department relied on FASCSA, the case went directly to the D.C. Circuit, an appellate court. Charlie Bullock of the Institute for Law & AI explained that the only standard appeals from the D.C. Circuit are to the Supreme Court or to an en banc panel of the D.C. Circuit — both discretionary. As Bullock summarized online, the ruling was “the expected outcome, given the terrible luck Anthropic had with the panel draw,” and he added that he would expect Anthropic to win before an en banc D.C. Circuit and "likely even before SCOTUS," although neither appeal is guaranteed.
Sean Timmons, a former JAG Corps officer now at law firm Tully Rinckey, echoed the procedural pathway and noted the political and judicial dynamics at play if Anthropic seeks en banc review. He pointed out that a full D.C. Circuit panel includes judges appointed across multiple administrations, making the court more “diverse and unpredictable” than a three-judge panel. Timmons also cautioned that when national security is invoked, courts often defer to the executive — a point he illustrated by saying the courts “are kind of like Pontius Pilate: They just want to wash their hands and walk away.” Yet he added that the profile and controversy of the case could prompt the full court to grant review and potentially overturn the 2–1 panel decision.
How the Pentagon, Anthropic, and defense contractors are affected
- Department of Defense: The D.C. Circuit ruling affirms the Pentagon’s authority, under the supply-chain designation, to block use of Anthropic tools across its systems and among contractors — a concrete restriction the Pentagon can enforce immediately within its jurisdiction.
- Anthropic: The company publicly signaled disagreement with the panel’s decision and said it is “considering all options, including further review,” pointing to its favorable outcome in the Northern District of California as part of its legal posture.
- Defense contractors and private-sector employees on defense work: The D.C. Circuit ruling authorizes the Pentagon to extend the ban to private-sector personnel working on defense contracts, potentially changing procurement and daily operational practices where Anthropic tools had been integrated.
The practical outcome for now is straightforward: the Pentagon’s ban stands within the Defense Department’s sphere. What follows is procedural and political — whether Anthropic seeks en banc review of the D.C. Circuit ruling, petitions the Supreme Court, or leans on the separate California judgment to limit the ban’s reach. Each of those next steps is explicitly on the record: Anthropic is “considering all options,” and legal analysts say an en banc rehearing or Supreme Court appeal are the available avenues, but neither is automatic.
