A federal judge has ruled that the U.S. Department of Defense acted unlawfully when it designated artificial intelligence company Anthropic as a supply chain risk, calling the move “illegal and baseless.” The ruling, issued Thursday by U.S. District Judge Rita Lin, marks a sharp rebuke of the Trump administration‘s unprecedented decision to blacklist an American firm.
In February, Defense Secretary Pete Hegseth designated Anthropic, the creator of the Claude AI models, as a supply chain risk under an obscure procurement statute aimed at protecting military systems from foreign sabotage. It was the first time a U.S. company had been publicly named such a threat. The move followed Anthropic’s refusal to allow the military to use its AI for surveillance or autonomous weapons, citing safety and rights concerns.
Judge Lin found that the Pentagon‘s actions violated Anthropic’s First Amendment rights, saying the government had punished the company for publicly criticizing military use of AI. “The empty invocation of national security is not a blank check to punish and retaliate against government critics,” Lin wrote in her 59-page decision. She described the designation as “based on a desire to make a public example” of Anthropic.
Anthropic welcomed the ruling. “We welcome the court’s ruling that this supply chain risk designation was unlawful,” a spokesperson said. The company argued that the designation could cost it billions in lost business and reputational harm, and that it was never given a chance to dispute the decision, violating its Fifth Amendment right to due process.
The government had countered that Anthropic’s refusal to accept new contract terms raised concerns about the reliability of its technology and argued that private companies should not be able to constrain military action. The White House had previously called Anthropic “a radical left, woke company” attempting to control military activity. President Donald Trump had lashed out at the company in a social media post.
Judge Lin, an appointee of Joe Biden, barred the agencies from enforcing the order and overturned the designation. The ruling takes effect immediately, though the government may appeal. Anthropic still faces a separate legal battle in Washington, D.C., over a second supply chain risk designation that could affect civilian government contracts.
The decision removes a major hurdle for Anthropic as it prepares for a possible record-breaking IPO, though the company said its lawsuits were aimed at returning its business to the status quo before the blacklisting.
