Anthropic lost its appeal against the Pentagon, on the strength of its own guardrails
The US Court of Appeals for the D.C. Circuit upheld the Pentagon's March designation of Anthropic as a national security supply chain risk on Friday, by two judges to one. Circuit Judges Gregory Katsas and Neomi Rao rejected Anthropic's argument that the designation was arbitrary, unauthorized and unconstitutional, with Circuit Judge Karen LeCraft Henderson dissenting. The designation keeps the Department of Defense and its contractors from using Claude, and Anthropic says it has cost the company billions in lost business and damaged its reputation ahead of a planned initial public offering.
The court's reasoning is the part worth keeping. Katsas wrote that the Department had ample support for concluding that continued integration of Claude into its information systems presented a statutorily covered national-security risk, and the majority put the Secretary of Defense's own argument on the record: the deeply sobering prospect of overly constrained AI models shutting down unexpectedly and thus causing important military operations to fail. Anthropic had refused to remove guardrails against its models being used for autonomous weapons or mass domestic surveillance. A federal judge in San Francisco struck down a parallel designation under a different law last month, finding the administration had unlawfully retaliated; Anthropic says it respectfully disagrees with Friday's ruling and is weighing review by the full appeals court.
WHY IT MATTERS
On September 12 Anthropic's chief executive published an essay asking the industry to pace the frontier. Thirteen days later the same company lost a court fight over the right to sell to the Pentagon on its own safety terms, and the court's holding is that a model which refuses, or stops, is a procurement liability. For anyone building on a vendor's safety guarantees, that cuts both ways: the guardrails that make a model safe to leave running unsupervised are the same properties a buyer with different priorities can price as a defect. A published safety policy turns out not to be something a court will protect; it is a term of trade, and the market is free to charge for it. The caveat deserves a line — the parallel California ruling that went the other way is still standing, so the legal position is unsettled rather than final.












