Appeals Court Rejects Anthropic's Emergency Motion to Pause Proceedings

The U.S. Court of Appeals for the District of Columbia Circuit on Wednesday denied Anthropic's emergency bid to temporarily block the Department of Defense's designation of the company as a supply chain risk, allowing the Pentagon's restrictions on its Claude AI models to remain in effect while broader litigation plays out.

A three-judge panel of the D.C. Circuit concluded that Anthropic "has not satisfied the stringent requirements for a stay pending court review," delivering a win for the Trump administration in a high-stakes legal dispute over the limits of Pentagon authority over private AI companies.

The ruling came after the DOD officially designated Anthropic a supply chain risk in early March, declaring that the company's technology threatened U.S. national security. The designation requires defense contractors to certify that they don't use Anthropic's Claude models in their work with the Pentagon.

The court acknowledged that Anthropic "will likely suffer some degree of irreparable harm absent a stay," but found that the company's interests "seem primarily financial in nature." In its written order, the panel framed the balance of equities in stark terms: "On one side is a relatively contained risk of financial harm to a single private company. On the other side is judicial management of how, and through whom, the Department of War secures vital AI technology during an active military conflict." Despite denying the stay, the panel said it would work quickly to review the case because Anthropic is likely to "suffer some irreparable harm" as the legal action plays out.

The ruling deepens a legal split between two federal courts. A judge in San Francisco granted Anthropic a preliminary injunction in a separate case last month, barring the Trump administration from enforcing a ban on the use of Claude. The split between the two courts means that Anthropic would remain excluded from defense contracts.

Anthropic argued that Defense Secretary Pete Hegseth overstepped his authority when he designated the company a national security supply chain risk, a label that blocks Anthropic from Pentagon contracts. The company filed two lawsuits in March, one in California and one in Washington, D.C., alleging the Trump administration violated its First Amendment rights.

The underlying dispute centers on Anthropic's refusal to allow its AI systems to be used in autonomous weapons or domestic mass surveillance. Anthropic argued in its suit that the Pentagon was aware of its position on Claude's limitations and that its stance was constitutionally protected speech.

Hegseth called Anthropic "sanctimonious" and accused it of trying to "strong-arm the United States military into submission." Anthropic CEO Dario Amodei countered that guardrails are necessary given the limitations of current AI systems and the serious privacy risks posed by large-scale surveillance applications.

The company was awarded a $200 million contract and has argued that the supply chain risk designation puts hundreds of millions of dollars in revenue at risk. With the D.C. Circuit now committed to an expedited review of the merits, the conflicting federal rulings are likely headed toward further judicial scrutiny before any resolution is reached.