[REUTERS/Dado Ruvic/Illustration]

A US appeals court in Washington D.C. has rejected a request by AI startup Anthropic to remove its designation as a "supply chain risk company" by the Department of Defense.

According to Politico, a three-judge panel of the appeals court ruled on the 8th (local time) to uphold the designation. The court will review the merits of the challenge to this designation.

In February, Anthropic informed Secretary of Defense Pete Hegses that it would not allow its Claude AI technology to be used by the Department of Defense for autonomous weapons or mass surveillance of U.S. citizens. Following this, Secretary Hegses and President Trump designated Anthropic as a supply chain risk company.

This designation, which has never been applied to a U.S. company, prohibits entities contracting with the Department of Defense from using Anthropic's AI models in their defense contracts.

Anthropic argued in its petition that the designation has caused it financial losses and damaged its reputation.

The appeals court's ruling reverses a temporary halt on the Department of Defense's supply chain risk rating designation that a California federal judge had issued last month.

In a four-page ruling, the judges stated, "The balance of equities tips in favor of the government."

The panel noted, "On one side, there is the relatively limited risk of financial harm to a single private company, and on the other, there is judicial oversight of how and through whom the Department of Defense obtains critical AI technology during actual military conflict."

U.S. NNP=Sung Ku Hong, Chief Reporter / Special Correspondent for this publication NNP info@newsandpost.com