A DC Circuit panel heard arguments in a dispute between the Pentagon and AI company Anthropic over the Pentagon’s designation of Anthropic as a national security supply-chain risk, which Anthropic says is unlawful retaliation for its AI safety concerns in warfare.

Anthropic argues it cannot manipulate Claude once deployed on classified Pentagon networks, while the government says there are ways the model could be misused in military contexts.

Judge Karen LeCraft Henderson criticized the designation as an overreach and questioned the Pentagon’s risk-based justification.

The May 19, 2026 hearing showed mixed reactions from the panel, with no clear ruling in favor of either side.

Judge Gregory Katsas participated in the hearing, underscoring the panel’s consideration of reconciling security concerns with regulatory action.

The panel’s deliberations indicated potential positions but no immediate ruling date was set.

Key figures included Defense Secretary Pete Hegseth, Anthropic’s founders and attorney Kelly Dunbar for Anthropic, and Justice Department attorney Sharon Swingle, with other Trump-nominated judges on the bench.

The case’s outcome could have wide implications for AI in military applications, regulatory authority over private AI development, and the balance between national security and commercial interests, with no ruling date announced.

The hearing followed mixed signals from courts on similar challenges, reflecting ongoing legal scrutiny of government restrictions on AI providers and the use of supply-chain risk designations.

The DOD continues to use Anthropic’s models for military operations, with political context including remarks from former President Trump about a potential deal with the DOD.

A timeline note suggests the DC Circuit may rule within weeks, while Trump has given the Pentagon six months to terminate Anthropic involvement.

Tuesday’s hearing did not reveal how soon the court will rule, but the questions showed differing views on the Pentagon’s justification and potential remedies.