IP Law Daily, AI NEWS: While injunction granted in California district court, D.C. Circuit denies Anthropic’s petition for stay, (Apr 14, 2026)

By George M. Gullo, J.D

The D.C. Circuit’s ruling identified three interlocking governmental interests that outweighed Anthropic’s financial harm.

Anthropic’s procurement dispute with the federal government is being litigated simultaneously in two federal courts, each addressing a different statutory basis for the government’s supply chain designation. The two cases share a common factual record and many overlapping legal theories, but they address different statutory authorities with different scope. The two proceedings have also produced divergent immediate outcomes but remain legally complementary rather than conflicting.

Two statutory bases. Anthropic’s decision to file in two forums was legally necessary. The government invoked two distinct statutory authorities: 10 U.S.C. § 3252 and the Federal Acquisition Supply Chain Security Act (FASCSA). Each statute provides its own judicial review mechanism, and those mechanisms are not interchangeable. 10 U.S.C. § 3252 implements the Defense Federal Acquisition Regulation Supplement’s supply chain exclusion authority, which applies to Department of Defense National Security System contracts. The § 3252 challenge is a standard Administrative Procedure Act (APA) action in federal district court. FASCSA (41 U.S.C. §§ 1321–1328) and 41 U.S.C. § 4713 prescribe the government-wide supply chain exclusion authority and provides for specialized judicial review. The FASCSA challenge is a statutory petition for review filed directly in the Court of Appeals for the District of Columbia under 41 U.S.C. § 1327, which provides specialized appellate review of “covered procurement actions” under § 4713.

Court proceedings. In the Northern District of California (Anthropic PBC v. U.S. Department of War, No. 3:26-cv-01996), Judge Rita F. Lin issued a preliminary injunction on March 26, 2026, restraining enforcement of the Secretary of War’s designation of Anthropic as a supply chain risk designation under 10 U.S.C. § 3252, which is the DoD-specific National Security Systems exclusion authority. Judge Lin found that Anthropic demonstrated a likelihood of success on the merits and that the balance of equities favored relief. She grounded her ruling on both the First Amendment and the Fifth Amendment Due Process Clause (see VITAL BRIEFING—Anthropic’s Dispute With the Department of War, Mar. 31. 2026).

In the D.C. Circuit (Anthropic PBC v. U.S. Department of War, No. 26-1049), a three-judge panel (Henderson, Katsas, and Rao) denied Anthropic’s petition for a stay of the Secretary’s designation under FASCSA. In its April 8, 2026, per curiamopinion, the panel did not address the merits and denied relief solely on equitable grounds, finding that the government’s interests in managing its AI supply chain during an active military conflict outweighed Anthropic’s primarily financial harm. The court simultaneously granted expedited review, with oral argument scheduled for May 19, 2026.

D.C. Circuit denial. The D.C. Circuit’s per curiam opinion denies the requested stay. The panel explicitly declined to address whether Anthropic is likely to succeed on its statutory, constitutional, or procedural claims. The court applied the equitable framework for extraordinary stays pending review under Nken v. Holder (556 U.S. 418 (2009)): (1) whether Anthropic has made a “strong showing” that it is likely to succeed on the merits; (2) whether it will suffer irreparable harm without a stay; (3) whether a stay will injure the Department; and (4) whether the public interest supports a stay. The panel acknowledged that Anthropic “will likely suffer some degree of irreparable harm absent a stay.” The panel, however, qualified its irreparable harm finding and confirmed that financial losses unrecoverable in litigation can constitute irreparable harm (see In re NTE Connecticut, LLC, 26 F.4th 980 (D.C. Cir. 2022)).

Equities balance. The focal point of the D.C. Circuit’s ruling involves the balance of equities. The panel identified three interlocking governmental interests that outweighed Anthropic’s financial harm:

• Active military conflict. Granting a stay would require the Department to “prolong its dealings with an unwanted vendor of critical AI services in the middle of a significant ongoing military conflict.” The reference is to the U.S. military campaign in Iran, which had already begun at the time of the March 3 designation.

• Deteriorated relationship. The panel noted that the parties’ relationship had deteriorated to the point where Anthropic’s CEO publicly called the Department’s statements “completely false” and “just straight up lies.” This finding was used to support the proposition that requiring the Department to continue relying on Anthropic’s technology would constitute a “substantial judicial imposition on military operations.”

• Update and modification control. The panel emphasized that the Department relies on Anthropic to provide ongoing model updates, and that Anthropic’s models contain built-in safeguards, which is why the court directed the parties to brief, on the merits, the extent to which Anthropic can affect model functioning after delivery.

The panel summarized its equitable calculus as: “On one side is a relatively contained risk of financial harm to a single private company. On the other side is judicial management of how, and through whom, the Department of War (DoW) secures vital AI technology during an active military conflict.”

Merits briefing. The D.C. Circuit’s order directs the parties to brief three specific issues, each of which is analytically significant and could be dispositive at the merits stage:

• Jurisdiction under 41 U.S.C. § 1327(b). Whether the D.C. Circuit has jurisdiction over Anthropic’s petition at all because § 1327(b) only authorizes review of “covered procurement actions” taken under § 4713. If the Secretary’s determination was not itself a “covered procurement action,” the D.C. Circuit may lack subject-matter jurisdiction and Anthropic may need to pursue the FASCSA challenge in district court.

• Whether “covered procurement actions” were actually taken. The per curiam statement notes that the Department has canceled contracts, begun removing Claude, and prohibited its contractors from using Anthropic as a subcontractor for DoW work but has not prohibited contractors from using Claude for non-DoW work. Whether the specific actions taken constitute “covered procurement actions” within the statute’s meaning is an open question.

• Anthropic’s ability to affect model functionality post-delivery. This is the government’s technical-risk argument: that Anthropic’s privileged position as model developer gives it the ability to alter Claude’s behavior remotely, which creates a security risk independent of the contract dispute. If accepted, this argument could support a broader exclusion rationale.

Complementary proceedings. The two rulings seemingly are in conflict—one court granted relief, the other denied it—but they address different statutes, apply different legal standards at different procedural stages, and were decided by courts operating under different jurisdictional constraints. There does not appear to be a doctrinal conflict between them. The preliminary injunction granted by the Northern District of California was governed by the Winter standard: likelihood of success on the merits, irreparable harm, balance of equities, and public interest (Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7 (2008)). The D.C. Circuit stay was governed by the more demanding Nken standard for extraordinary stays pending review, applied to the distinct FASCSA designation. The panel denied relief solely on equitable grounds without opining on Anthropic’s likelihood of success.

The distinction in how the courts treated the equitable factors reflects their different institutional contexts. The D.C. Circuit, reviewing an executive national security determination in the middle of an active military conflict, applied substantial deference to the government’s judgment. Judge Lin, in a standard APA district court proceeding, was not operating under the same deference framework and the § 3252 statutory challenge presented a more cleanly defined textual argument than the FASCSA challenge does.

Conclusion. The D.C. Circuit’s stay denial is a significant procedural setback for Anthropic in the FASCSA proceeding, but it is not a ruling on the merits and should not be read as a signal of the likely outcome of the expedited merits review. The court explicitly declined to address whether Anthropic is likely to succeed on its claims—which it characterized as raising “novel and difficult questions”—and denied relief solely because the balance of equities in the context of an active military conflict favored the government at the emergency stage. The district court preliminary injunction, by contrast, is a merits-grounded ruling finding that Anthropic is likely to succeed on its § 3252 statutory claims. That injunction is currently in force. Together, the two rulings establish that Anthropic has meaningful legal traction on its core statutory arguments while facing a demanding equitable standard in the forum where the broader, more consequential FASCSA authority is being tested.

The dispositive legal questions—whether FASCSA’s foreign-adversary supply chain framework applies to domestic policy disagreements, whether the mandatory procedural prerequisites were satisfied, and whether the major questions doctrine limits the government’s claimed authority to condition AI procurement on the removal of safety constraints—will be resolved on the merits.

Attorneys: Kelly Patrick Dunbar (Wilmer Cutler Pickering Hale and Dorr LLP) for Anthropic PBC. Sharon Swingle, U.S. Department of Justice, for U.S. Department of War.

Companies: Anthropic PBC

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