D.C. Circuit upholds Pentagon supply-chain-risk label on Anthropic in 2-1 ruling
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What happened
On September 25, 2026, the U.S. Court of Appeals for the D.C. Circuit upheld the Pentagon's designation of Anthropic as a supply chain risk, ABC News reported. The panel ruled 2-1 and rejected Anthropic's challenges to the designation, including claims that it violated the company's free speech and due process rights. Anthropic had also argued that the government retaliated against it for opposing the use of its AI in lethal autonomous warfare or mass surveillance of Americans. Judge Karen LeCraft Henderson dissented.
According to ABC, the majority found the Defense Department had enough evidence to conclude that Claude's built-in restrictions and an unresolved contract dispute could make it unreliable for military operations. Henderson wrote that the law does not treat a contractor's open enforcement of restrictions as a supply-chain risk. A separate lawsuit went differently: U.S. District Judge Rita Lin ruled against the government in August, and ABC said that ruling remained in effect. Anthropic said it disagreed with the appellate decision and was considering all options, including further review. The Defense Department's spokesman said the ruling validated the department's position.
Key points
- The D.C. Circuit upheld the Pentagon's supply-chain-risk designation of Anthropic in a 2-1 ruling on September 25, 2026.1
- Judge Karen LeCraft Henderson dissented, disagreeing with the majority's reading of the law.1
- The majority found enough evidence that Claude's restrictions and an unresolved contract dispute could make it unreliable for military operations.1
- A separate August ruling by Judge Rita Lin against the government remained in effect, ABC said.1
- Anthropic said it was considering all options, including further review.1
Why it matters
The appeals ruling left the Pentagon's designation in place, so the Defense Department dispute remained a legal exposure for the business. ABC gave no figure for any defense revenue involved.
Anthropic said another federal court had already held the government's parallel designation unlawful, and ABC said Judge Lin's August ruling remained in effect. The legal position therefore differs between the two proceedings.
Anthropic said it was considering all options, including further review, so the company did not describe the dispute as closed.
In context
| Round | Date | Post-money valuation | Raised | Led by |
|---|---|---|---|---|
| Series E | Mar 3, 2025 | $62B | $3.5B | Lightspeed Venture Partners |
| Series F | Sep 2, 2025 | $183B | $13B | Fidelity Management & Research Company, ICONIQ, and Lightspeed Venture Partners |
| Series G | Feb 12, 2026 | $380B | $30B | Coatue, D. E. Shaw Ventures, Dragoneer, Founders Fund, GIC, ICONIQ, and MGX |
| Series H | May 28, 2026 | $965B | $65B | Altimeter Capital, Capital Group, Coatue, D1 Capital Partners, Dragoneer, GIC, Greenoaks, ICONIQ, Sequoia Capital, and XN |
Updated
Fact-check
- The D.C. Circuit upheld the Pentagon's supply-chain-risk designation of Anthropic in a 2-1 ruling on September 25, 2026.Confirmed by [1] ABC News: a 2-1 decision on Friday, September 25, 2026 rejected Anthropic's challenges to the designation.Verified
- Judge Karen LeCraft Henderson dissented.Confirmed by [1] ABC News, which says she disagreed with the majority's reading of the law giving the department this authority.Verified
- The majority said the department had enough evidence that Claude's restrictions and a contract dispute could make it unreliable for military operations.Confirmed by [1] ABC News, which reports this as the majority's reasoning.Verified
- Judge Rita Lin ruled against the government in August in a separate lawsuit, and that ruling remains in effect.Confirmed by [1] ABC News, which describes the August decision and says the ruling remains in effect.Verified
- Anthropic said it was considering all options, including further review.Confirmed by [1] ABC News, which reports this statement from Anthropic.Verified
Sources
- [1]ABC News (opens in a new tab)Federal appeals court upholds Pentagon designation of Anthropic as supply chain riskAnother federal court has already held the government's parallel designation unlawful.
