A federal court battle over Anthropic’s Claude tools is testing how the Department of War (formerly the Pentagon) classifies AI software suppliers as security risks. Lawyers sparred over a government push for an “all lawful use” clause that would expand military discretion for Claude use, including contested applications the company argues are not safely validated. Anthropic sued after the administration directed agencies to cease using the tools and after officials labeled Anthropic a supply-chain risk, banning government contractors from using its systems. Anthropic alleges First Amendment and due process violations, while the government argues it can set contracting terms and guardrails. The outcome could influence procurement and academic technology partnerships wherever campus or research AI tools interface with government compliance frameworks.