Federal judge rules Pentagon's blacklisting of Anthropic was illegal

A federal judge in San Francisco ruled Thursday that the Pentagon's designation of Anthropic as a national security "supply chain risk" was illegal, handing the Claude maker a major win in its fight with the Trump administration over military use of AI.

What's new

U.S. District Judge Rita Lin, in a 59-page order, found that the Department of Defense violated the First Amendment by designating Anthropic a supply chain risk "based on a desire to make a public example" out of the company. Lin held that the government's own justifications did not hold up: "Neither the Constitution nor the federal statute invoked by Defendants allows them to impose sweeping penalties based principally on Anthropic's critique of the Administration's views."

Lin was blunt about the government's underlying motive, writing that "the empty invocation of national security is not a blank check to punish and retaliate against government critics." The ruling sets aside the supply chain risk designation and permanently bars the government from giving it effect.

An Anthropic spokesperson welcomed the outcome: "We welcome the court's ruling that this supply chain risk designation was unlawful. We remain focused on working productively with the government to harness AI for our national security so all Americans benefit from this technology."

Context

The dispute traces back to negotiations between Anthropic and the Pentagon over how the military could deploy Claude. Anthropic wanted contractual guarantees that its models would not be used for fully autonomous lethal weapons or domestic mass surveillance; the Department of Defense wanted unrestricted access to Claude for any lawful purpose. When talks broke down, Defense Secretary Pete Hegseth designated Anthropic a supply chain risk in March 2026 — a label historically reserved for foreign entities considered national security threats, and the first time it had been applied to a U.S. company. The designation barred defense contractors from working with Anthropic and threatened a business Anthropic executives said could be worth billions of dollars.

Anthropic sued in California and, separately, in Washington, D.C., arguing the designation violated its First Amendment rights and was imposed without due process under the Fifth Amendment. Thursday's ruling resolves the California case. The company's second lawsuit, covering a related supply chain risk designation with implications for civilian government contracts, is still pending in D.C. — meaning Anthropic technically remains designated a supply chain risk until that case is resolved.

Why it matters

The ruling is the most significant legal setback yet for the Trump administration's approach to AI companies that push back on government demands, and it establishes a judicial check on the use of national-security procurement authority as a retaliatory tool. For Anthropic, it removes — for now — a designation that was actively blocking defense-sector business and threatening its standing with contractors more broadly. The government is expected to appeal, and the outstanding D.C. litigation means the underlying fight over how much latitude the Pentagon has to compel AI labs to drop safety restrictions is far from over. The case is also being watched closely across the industry as a precedent for how far the government can go in pressuring AI companies over model-use restrictions tied to autonomous weapons and surveillance.