Court Rules Trump Administration Can Keep Anthropic Blacklisted Despite Lower Court Ruling
The DC Circuit Court of Appeals has ruled that the US government may continue to designate Anthropic as a supply-chain risk, even though a lower court found the same action illegal last month. Both courts agree Anthropic showed no bad motive, but the appeals court applied a broader law that doesn't require one.
The US Court of Appeals for the DC Circuit has ruled that the federal government can keep AI company Anthropic classified as a supply-chain risk, despite a lower court's finding last month that the designation was unlawful.
A judge in the US District Court for the Northern District of California had ruled that the blacklisting violated the law because Anthropic does not meet the definition of a supply-chain risk under 10 U.S.C. § 3252. That statute limits such risk to cases where an 'adversary' acts with sabotage, deliberately introduces unwanted functions, or otherwise subverts a covered system — language the district court found implies a requirement of bad motive.
Today's DC Circuit ruling did not dispute that underlying finding. The appeals court agreed that the district court was correct about what Section 3252 requires, and agreed that Anthropic showed no bad motive in its dealings with the Department of Defense. However, the appeals court explained that the district court only had authority to review the designation under one statute, while Congress gave the DC Circuit exclusive jurisdiction to review procurement decisions made under a separate, broader law: 41 U.S.C. § 4713.
A broader standard, no bad motive required
Unlike Section 3252, Section 4713 defines 'supply chain risk' far more broadly — as the risk that any person may sabotage, maliciously introduce unwanted function, extract data, or otherwise manipulate the design, manufacturing, distribution, or operation of covered technology, in order to surveil, deny, or disrupt the function of those products or the information they handle. This provision does not require proof of bad intent.
The US government had designated Anthropic as a supply-chain risk under both statutes. Because Congress granted the DC Circuit exclusive jurisdiction over decisions made under Section 4713, that broader designation stands, allowing the blacklisting to remain in effect even though the narrower Section 3252 designation was found unlawful.
