A 2-1 ruling by the U.S. Court of Appeals for the D.C. Circuit upheld the Department of Defense’s designation of Anthropic as a supply-chain risk under the Federal Acquisition Supply Chain Security Act of 2018. The dispute arose after Anthropic refused to remove contractual restrictions barring Claude from lethal autonomous warfare and mass surveillance of Americans, despite allowing uses including weapons-system design, foreign intelligence analysis and offensive cyber operations. The court rejected Anthropic’s arguments that the government could test individual models before deployment, as well as its constitutional and retaliation claims. A separate federal court in California has ruled against a related designation under a different statute, leaving conflicting decisions on separate legal questions. The ruling keeps Anthropic under pressure in its Pentagon relationship and highlights a broader industry dispute over whether governments or AI developers should control the deployment of advanced models in military operations.