Court rules Trump can blacklist Anthropic for refusing to enable Claude features

Two courts have been reviewing the US blacklisting of Anthropic. A judge in US District Court for the Northern District of California ruled last month that the action was illegal because Anthropic does not meet the definition of a supply-chain risk, which is limited to “the risk that an adversary may sabotage, maliciously introduce unwanted function, or otherwise subvert… a covered system.” Today’s ruling from the DC Circuit did not dispute the district court’s primary finding. But it said the district court was tasked with reviewing whether the decision was allowed under one law while the appeals court has exclusive jurisdiction to review the decision under a different, more permissive grant of authority. The district court decision found a violation of 10 U.S.C. § 3252, in which supply chain risks are limited to malicious actions by adversaries. The appeals court reviewed the blacklisting under 41 U.S.C. § 4713, which doesn’t have the same restrictions. Notably, Congress gave the DC Circuit appeals court exclusive jurisdiction to review procurement actions taken under Section 4713 designations. The use of “any person” shows that the definition is not limited to adversaries or foreign entities, the court said. The court also pointed to the word “deny,” which it said applies to Anthropic preventing the US from using certain Claude features. “In sum, we conclude that the Secretary’s concern about Anthropic disabling Claude from performing lawful actions requested by the Department qualifies as a ‘supply chain risk’ within the meaning of section 4713,” the court majority said. It also said “the Department reasonably feared that Anthropic might manipulate Claude’s design to prevent it from performing national-security functions that the Department deems contractually authorized and necessary.” The dissenting vote was cast by Judge Karen Henderson, a George H.W. Bush appointee. Henderson disputed the majority’s reading of the definition in 4713, saying that when “viewed in their statutory context, the verbs at issue are all directed at deliberately impeding or eavesdropping on the ‘function, use, or operation’ of a covered article that has entered the federal supply chain.” Congress “enacted the statute in response to calls from the US intelligence community for legislation to meet the threat of ‘[h]ostile nation state and other bad actors’ infiltrating the federal government’s information and technology systems through its supply chains,” Henderson wrote. She said the definition should not be interpreted to cover “a contractor’s honest and upfront enforcement of restrictions on a covered article’s use disfavored by the government.” Anthropic alleged, and the district court judge in California agreed, that the Trump administration illegally retaliated against the company after it refused to drop restrictions on the use of its products for lethal autonomous warfare and mass surveillance of Americans. The appeals court said that Anthropic “encodes restrictions into Claude that prevent the model from performing tasks that Anthropic wishes to prevent. On more than one occasion, these restrictions have stopped Claude from performing tasks requested by government users. And recently, a dispute arose over whether the contractual prohibitions barred the use of Claude in an ongoing overseas military operation, leaving the Department uncertain whether Claude would perform as needed and intended.” The case in the Northern District of California was presided over by Judge Rita Lin, a Biden appointee. Lin determined that the blacklisting violated the First Amendment. “The empty invocation of national security is not a blank check to punish and retaliate against government critics,” she wrote.