Key Notes
- Judge Rita Lin ruled the Pentagon's "supply chain risk" designation of Anthropic was unlawful, finding it "unlawful retaliation" under the First Amendment, "arbitrary and capricious," and a Fifth Amendment due-process violation; she ordered the designation removed.
- The dispute began after Anthropic refused Pentagon contract terms that would have let its models be used for autonomous weapons and mass surveillance; the government argued the label was about trust and contractual disputes, not viewpoint retaliation, and denies any punitive intent.
- Lin found the government's own conduct undercut its justification and called the label a bid to "make a public example" of the company for criticizing the administration.
A federal judge in California ruled Thursday that the Trump administration’s designation of Anthropic as a national security “supply chain risk” was illegal, ordering the label removed. U.S. District Judge Rita Lin found that Defense Secretary Pete Hegseth’s decision amounted to “unlawful retaliation” in violation of the First Amendment, called it “arbitrary and capricious,” and ruled that Anthropic had been denied the process required under the Fifth Amendment.
The designation, applied in March, had barred all federal agencies, not just the Defense Department, from working with Anthropic’s products. Supply chain risk labels of this kind had historically been reserved for companies seen as connected to foreign adversaries capable of infiltrating or sabotaging military systems, making the government’s use of the tool against a US AI company unusual.
The dispute traces to Anthropic’s refusal to remove safety guardrails that would have let the Pentagon use its Claude models for fully autonomous weapons and mass surveillance of American citizens, a position CEO Dario Amodei laid out publicly. The government has argued in court that the designation stemmed from Anthropic’s refusal to accept specific contractual terms rather than from its public statements on AI safety, and that officials could not trust Anthropic to guarantee the integrity of its models given what filings described as the company’s “increasingly hostile manner through the press.” Lin rejected that framing as unsupported by the evidence in her 59-page ruling.
Central to Lin’s reasoning was a set of contradictions she found in the government’s own conduct. She pointed to Hegseth’s separate proposal to invoke the Defense Production Act to compel Anthropic’s cooperation, a move that would only make sense if the company were “essential to national security rather than a threat to it.” She also noted that the Defense Department continued pursuing a contract with Anthropic even after the designation, and that the government was separately collaborating with Anthropic’s newer Mythos model on cybersecurity work. Lin wrote that Anthropic “undisputedly lacks” any backdoor access to its technology once handed over to the Pentagon, undercutting the security rationale.
“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.”
An Anthropic spokesperson said the company welcomed the ruling and remains “focused on working productively with the government to harness AI for our national security so all Americans benefit from this technology.” The Justice Department did not immediately comment on the ruling in reporting reviewed here.
Why It Matters
The ruling is a significant legal check on the government’s use of national-security designations against a company that publicly disagreed with official policy, and Lin was explicit that neither the Constitution nor the statute the government invoked permits “sweeping penalties based principally on Anthropic’s critique of the Administration’s views.”
The case sits inside a broader, unusually public standoff between Washington and a major AI lab over how the military may use frontier models, one that intensified after Anthropic’s chief rival, OpenAI, struck its own Pentagon deal just hours after the government first penalized Anthropic. Both companies are separately preparing for high-profile IPOs, adding financial stakes to a dispute already carrying constitutional weight.
The fight is not fully resolved. Anthropic filed two related lawsuits in March, one in California, decided here, and a second still pending in Washington, D.C., over a related supply-chain-risk basis affecting civilian government contracts. It remains unclear whether the administration will appeal Thursday’s ruling or wait for the D.C. case to conclude first, meaning the legal and political conflict between Anthropic and the Pentagon is likely to continue even as this specific designation has now been struck down.
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