Anthropic, which was labeled a national security risk for upholding Claude's security red lines, has applied for a retrial after losing a 2-1 ruling.
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Beating AI News Flash: The legal battle between Anthropic and the Pentagon is ongoing. On October 13, Anthropic requested the full Washington Federal Appeals Court to rehear the blacklist case. On September 25, a three-judge panel ruled 2-1 in favor of the Pentagon, keeping Anthropic on the list of high-risk entities in the national security supply chain. Anthropic claims the ban has cost it billions of dollars in business. The two sides were originally partners. In July 2025, Anthropic had just secured a $200 million contract with the Pentagon, which later fell apart over usage restrictions for its Claude AI model. Anthropic has stuck to two non-negotiable red lines: no use of its AI for mass surveillance of Americans, and no autonomous AI decision-making for lethal attacks. The military, meanwhile, demanded that Claude be allowed for all lawful military purposes. In March this year, the Pentagon blacklisted Anthropic, banning further use of its technology in defense projects. The core controversy: Why would setting safety restrictions on an AI constitute a national security risk? The Pentagon argues that Claude has in the past refused to carry out government tasks due to its built-in restrictions, and a sudden inability to follow orders during wartime could disrupt military operations. Two judges on the panel accepted this reasoning. Anthropic counters that the relevant laws, originally designed to guard against malicious disruptions to supply chains, have now been stretched to cover normal model safety limits set by companies.
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