A federal judge in California ruled Thursday evening that the Trump administration’s designation of Anthropic as a supply-chain risk was illegal, marking the AI company’s first court win in its dispute with the Pentagon.
U.S. District Judge Rita Lin said Defense Secretary Pete Hegseth’s labeling of Anthropic as a national security threat constituted “unlawful retaliation” in violation of the First Amendment. She also called the decision “arbitrary and capricious” and said the company was denied due process under the Fifth Amendment.
The dispute over AI safety guardrails
Earlier this year, Hegseth and President Donald Trump ordered all federal agencies, including those outside defense, to stop working with Anthropic. The order came after the company set firm safety limits that would have prevented the Pentagon from using its models for fully autonomous weapons and mass surveillance of American citizens.
The Pentagon denied it intended to use Anthropic’s models for anything other than lawful purposes. It also alleged that Anthropic could try to control how the military used the technology it had purchased.
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The labeling and the contract dispute have now created an odd situation for the government. Hegseth had proposed applying the Defense Production Act to Anthropic, a move that would treat the company as essential to national security rather than a threat to it. The Department of Defense also continued pursuing a contract with Anthropic and collaborated with the company on its new model, Mythos, for cybersecurity work.
For a company trying to work with the federal government, the mixed signals are hard to reconcile. Anthropic has said it wants to help with national security, but it also wants some control over how its models are used. Thursday’s ruling suggests the courts see the government’s punishment as out of proportion to the actual disagreement over safety standards.
What the judge found
Lin wrote that the government’s “words and deeds confirm that the challenged actions were based on a desire to make a public example out of Anthropic for its ‘arrogance’ in criticizing the government.”
She also noted that Anthropic “undisputedly lacks” any backdoor access to its technology once it is handed over to the Department of Defense.
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“Though the Department of War is undisputedly free to select the AI vendor of its choice, the evidence demonstrates that the broad measures imposed on Anthropic were illegal and baseless,” Lin wrote. “The empty invocation of national security is not a blank check to punish and retaliate against government critics,” she added.
Anthropic filed two complaints against the DOD in March, one in California and one in Washington, D.C. The D.C. case is still ongoing.
“We welcome the court’s ruling that this supply chain risk designation was unlawful,” an Anthropic spokesperson said in a statement. “We remain focused on working productively with the government to harness AI for our national security so all Americans benefit from this technology.”
