Anthropic's "Supply Chain Risk" Designation Stemmed from Its Refusing to Agree to Contract Terms, Not Its Speech

From Judge Gregory Katsas, joined by Judge Neomi Rao, in today’s D.C. Circuit decision in Anthropic PBC v. U.S. Department of War:

To succeed on such a First Amendment retaliation claim, the plaintiff or petitioner must prove that (1) it engaged in protected speech, (2) the government took materially adverse action against it, and (3) the speech caused the materially adverse action

Anthropic has satisfied the first and second prongs of this test, but not the third. The First Amendment squarely protects Anthropic’s advocacy regarding the safe and appropriate use of AI products. Moreover, the Department’s exclusion of Claude from its supply chain plainly qualifies as a materially adverse action. However, we can discern no causal connection between the two. Instead, the record makes clear that the Department removed Anthropic from its supply chain not because of its advocacy, but because Anthropic refused to agree to a contract term the Department deemed essential to national security.

Consider the timeline. By its own admission, Anthropic has advocated for use and safety restrictions since its founding: The company describes its own commitment to model safety as “the core of Anthropic’s mission,” and describes its use restrictions as reflecting “the very purpose for which [the] company was founded” and its “deeply held values.” But throughout 2024 and 2025, the Department never acted adversely to Anthropic. Instead, it included Anthropic in a $200 million AI contract awarded in July 2025, and it sought to expand its relationship with Anthropic.

Additionally, in January 2026, Amodei published a long article calling for “limits” and “safeguards” on the use of AI-powered weapons in democracies. But instead of retaliating against Anthropic because of this advocacy, the Department continued to pursue negotiations.

Only when the negotiations broke down did the Department take action: On February 24, the Secretary met with Amodei and demanded that Anthropic accept an “all lawful uses” term by February 27. On February 26, Amodei published a final, public refusal to assent to that term. On February 27, the Secretary announced his intention to exclude Anthropic from the Department’s supply chain. And on March 3, he made the formal, written determination required by the Supply Chain Security Act.

Anthropic points to various pungent statements in the Secretary’s February 27 social media post. Among other things, the Secretary denounced Anthropic’s “sanctimonious rhetoric,” “virtue-signaling,” and “Silicon Valley ideology.” Such rhetoric seldom provides a sound basis for judging the lawfulness of federal executive action.

In any event, for all its flourishes, the Secretary’s social media post squarely addresses Anthropic’s refusal to provide the “all lawful uses” contractual authorization. He described Anthropic’s behavior as a “textbook case of how not to do business” with the Pentagon. He reiterated the Department’s demand for “full, unrestricted access to Anthropic’s models for every lawful purpose in defense of the Republic.” And he characterized Anthropic’s refusal to provide that access as imposing an unacceptable “veto power over the operational decisions of the United States military.” The nub of this dispute was contractual, and the First Amendment did not require the Department to continue a contractual relationship that it viewed as creating a national-security risk.

Judge Karen LeCraft Henderson didn’t reach the First Amendment question, because she concluded that the action against Anthropic wasn’t authorized by statute.

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