Anthropic fails in court appeal to halt Pentagon blacklisting

A federal appeals court in Washington, D.C., on Wednesday, rejected Anthropic's request to temporarily prevent the Department of Defense from blacklisting the artificial intelligence (AI) company while a legal challenge against that action is ongoing.

This decision follows a ruling from a San Francisco federal court late last month in a separate but related case, where Anthropic was granted a preliminary injunction preventing the Trump administration from enforcing a ban on the use of Claude.

"In our assessment, the balance of fairness here leans toward the government," the appeals court stated in its decision.

"On one side is a somewhat limited threat of financial loss to one private entity. On the other side, there is the management of judicial processes concerning how the Department of Defense acquires vital AI technology amidst an ongoing military conflict. Therefore, we reject Anthropic's request for a stay while the case is under review on its merits."

Due to these contrasting court decisions, Anthropic is unable to secure DOD contracts but can still collaborate with other government bodies while the legal proceedings continue.

The DOD labelled Anthropic a supply chain risk in early March, claiming that the company's technology usage might jeopardise US national security.

This designation compels defense contractors to verify that they do not incorporate Anthropic's Claude AI models in their defense-related activities.

Anthropic had asked the appeals court to examine the Pentagon's declaration, arguing that it represents unconstitutional, arbitrary, and capricious retaliation that lacks the necessary legal procedural basis, as per a filing.

In Wednesday's decision, the court acknowledged that Anthropic "is likely to incur some irreparable damage without a stay," but noted that the company's concerns "seem primarily financial."

Although the company contended that the DOD obstructed its freedom of speech, "Anthropic does not prove that its speech has been suppressed during this litigation," the court order specified.

In light of the potential damage Anthropic may suffer, the appeals court concluded that "rapid proceedings are justified."

An Anthropic spokesperson stated after the decision that the company is "thankful the court recognised the necessity to resolve these matters swiftly" and that they "remain optimistic that the courts will eventually determine these supply chain designations were impermissible."

The DOD based its supply chain risk action on two separate designations under US federal law, necessitating challenges in two different courts.

Anthropic's lawsuit against the Pentagon in March followed a tense couple of weeks in Washington D.C., involving the Department of Defense and one of the world's most valuable private companies.