The Claude AI system is barred from U.S. military procurement and government contracts following a decision by the D.C. Circuit Court of Appeals to uphold a "supply chain risk" designation. A three-judge panel ruled 2-1 on Friday that the Pentagon had "ample support" for concluding that integrating Anthropic's models into defense information systems presented a statutorily covered national-security risk. The ruling rejected a legal challenge from the AI developer that sought to block its placement on the military blacklist.

The decision contrasts with an August ruling by a California federal judge that found the designation unlawful and blocked it from taking effect. Anthropic claims the blacklist has already cost the company billions in lost business and damaged its corporate reputation as it prepares for an initial public offering. A spokesperson for the company stated that it disagrees with the D.C. ruling and is considering further legal review.