Anthropic’s Claude model is caught in a legal standoff after a US appeals court ruling on Wednesday conflicted with a separate lower-court decision from March. The result is uncertainty about whether—and how—the US military can use Claude while the courts decide how two similar Pentagon supply-chain-risk laws apply to the company, according to WIRED.
The Appeals Court Decision
A three-judge appellate panel in Washington, DC, ruled on Wednesday that Anthropic “has not satisfied the stringent requirements” to temporarily lose the Pentagon’s supply-chain-risk designation. The ruling conflicts with an earlier decision by a judge in San Francisco, creating legal uncertainty about how the company’s AI tools can be used by the military.
The appellate panel emphasized operational risk in its reasoning. “Granting a stay would force the United States military to prolong its dealings with an unwanted vendor of critical AI services in the middle of a significant ongoing military conflict,” the panel wrote. The judges stated they did not want to risk “a substantial judicial imposition on military operations” or “lightly override” military judgments tied to national security.
The panel acknowledged that Anthropic may face financial harm from the ongoing designation but framed its decision around avoiding interference with military operations while the legal issues remain unresolved.
Two Laws, Two Courts, One Company
The government sanctioned Anthropic under two different supply-chain laws with similar effects. Each court is addressing only one of those laws—one in San Francisco and the other in Washington, DC. This division creates a structural complication because the legal outcomes are not automatically harmonized.
The appeals court in Washington, DC, ruled on whether Anthropic could temporarily lose the designation tied to one law. Meanwhile, the San Francisco judge had already ordered the label removed in a separate case involving the other law. Anthropic has said it is the first US company designated under both laws. The laws are typically used to address foreign businesses that pose national security risks.
The current setup creates a scenario where one court’s order can be in tension with another court’s preliminary ruling, raising questions about how the federal courts will reconcile these parallel legal tracks.
Bad Faith Findings and Conflicting Orders
In San Francisco, a judge found that the Department of Defense likely acted in bad faith toward Anthropic. This determination was tied to two factors: frustration over the AI company’s proposed limits on how its technology could be used, and Anthropic’s public criticism of those restrictions.
Based on that finding, the San Francisco judge ordered the supply-chain risk label removed. The Trump administration complied by restoring access to Anthropic AI tools inside the Pentagon and throughout the rest of the federal government.
The Wednesday appeals court decision in Washington, DC, did not grant a temporary loss of the designation under the law being reviewed there. It was not immediately clear how the conflicting preliminary judgments would be resolved.
Implications for AI Deployment in Defense
The conflicting rulings raise an immediate operational question: what happens to Claude usage by the US military when courts disagree on the legal basis for the supply-chain-risk label. The appeals court’s language suggests that judges are prioritizing continuity of military decision-making over quickly overriding designations.
The appellate panel described the case as unprecedented, pointing to the unusual position of Anthropic as the first US company subject to both supply-chain laws. The panel’s concern about “a substantial judicial imposition on military operations” indicates that courts may be cautious about forcing immediate changes to defense AI procurement or usage policies while litigation proceeds.
Anthropic spokesperson Danielle Cohen stated that the company is grateful the Washington, DC, court “recognized these issues need to be resolved quickly” and remains confident “the courts will ultimately agree that these supply chain designations were unlawful.”
At the industry level, this case could establish a reference point for how AI model providers prepare for regulatory and legal risk assessments tied to national security frameworks. The legal outcome may shape how defense customers evaluate AI vendors and how vendors negotiate or respond to usage restrictions.
Source: WIRED