A US appeals court has approved the Department of Defense's blacklisting of Anthropic technology, ruling that the Trump administration had the authority to blacklist the company for withholding certain AI features from the military, even if there was no malicious intent.

The court said that the case raises profoundly difficult questions about the appropriate military uses of almost unimaginably powerful new technology. The ruling stated that the US could face the ‘deeply sobering prospect of overly constrained AI models shutting down unexpectedly’ while Anthropic could face the ‘deeply sobering prospect of unconstrained AI models hallucinating inappropriate targets for lethal military force.

Trump and Defense Secretary Pete Hegseth must now determine how best to balance the competing risks, the court said. In doing so, the Secretary did not transgress any limits on his authority under the Supply Chain Security Act or the Constitution. The same court previously denied Anthropic’s emergency motion for a stay in April.

Anthropic sued the Trump administration in March after it ordered federal agencies to stop using Anthropic’s products and banned defense contractors from doing any business with Anthropic. Anthropic may appeal today’s ruling, either by asking for an en banc review with all of the appeals court judges or by petitioning the Supreme Court.

Despite the ongoing legal battle, Commerce Secretary Howard Lutnick recently said the Trump administration and Anthropic have patched up their relationship and are ‘in tune’.