U.S. District Judge Rita Lin of the Northern District of California issued a ruling on Thursday evening, finding that the Pentagon's designation of Anthropic as a supply chain risk was "illegal and baseless." The judge stated that the measures imposed on Anthropic were "unlawful retaliation" and a violation of the company's First Amendment rights. Anthropic had filed a lawsuit in March, alleging that the designation was an "unlawful campaign of retaliation" after the company refused to allow unrestricted military use of its AI models.
The dispute originated in February when President Donald Trump and Defense Secretary Pete Hegseth accused Anthropic of endangering national security. This followed Anthropic's refusal to permit the military to use its Claude AI models for mass domestic surveillance or fully autonomous weapons. Anthropic CEO Dario Amodei maintained that the company's AI models were not reliable enough for autonomous weapons and that mass domestic surveillance would infringe on fundamental rights.
Judge Lin's 59-page ruling stated that the government's actions were motivated by a desire to "make a public example out of Anthropic for its 'arrogance' in criticizing the government," rather than any substantial national security concerns. She also noted that Anthropic was denied the pre-deprivation process required under the Fifth Amendment, which guarantees due process. The judge emphasized that the "empty invocation of national security is not a blank check to punish and retaliate against government critics."
The supply chain risk designation, typically reserved for foreign adversaries, had effectively blacklisted Anthropic from federal contracts and impacted its ability to work with military contractors. Anthropic had argued that this move could cost the company billions of dollars in lost business and cause lasting reputational damage. The company's lawsuit also contended that the designation was factually unsupported and inconsistent with the military's prior positive assessments of Claude's capabilities.
Prior to this ruling, Judge Lin had issued a preliminary order in March, temporarily blocking the Pentagon from labeling Anthropic a supply chain risk and halting a presidential directive that sought to bar federal agencies from using Anthropic's AI chatbot, Claude. During a July 30 hearing, Lin had expressed concerns about the government's position, describing it as "really troubling" and "at odds with the First Amendment."
Following the ruling, an Anthropic spokesperson welcomed the court's decision, stating that the company remains focused on "working productively with the government to harness AI for our national security so all Americans benefit from this technology." The Pentagon did not immediately respond to requests for comment. This ruling addresses one of two lawsuits Anthropic filed against the Pentagon; a separate, overlapping case is still pending in Washington, D.C. The government is expected to appeal this decision.