A federal judge has sided with Anthropic in its legal fight against the Pentagon, ruling that the Department of Defense acted illegally when it labeled the AI company a supply chain risk earlier this year. U.S. District Judge Rita Lin issued a written order finding the government punished Anthropic for criticizing the Pentagon’s approach to AI use, not for any legitimate security concern.
The dispute began in February when President Donald Trump and Defense Secretary Pete Hegseth accused Anthropic of endangering national security and formally designated the company a supply chain risk. The move came after Anthropic CEO Dario Amodei declined to soften the company’s position on limiting use of its technology for mass surveillance or autonomous armed drones.
In her 59-page ruling, Lin wrote that the government’s actions “were based on a desire to make a public example out of Anthropic for its ‘arrogance’ in criticizing the government, not based on any articulable basis to believe that Anthropic would actually sabotage its model.” She found that neither the Constitution nor the federal statute the government cited permits Washington to impose sweeping penalties primarily because a company criticized the administration’s views.
Anthropic sued the Pentagon in March, calling the designation an “unlawful campaign of retaliation” tied to its refusal to allow unrestricted military use of its models. The case became a flashpoint in the broader debate over how AI companies should navigate military applications and surveillance concerns. Notably, rival OpenAI struck its own Pentagon deal within hours of Anthropic being sanctioned.
Earlier in the proceedings, Lin had already temporarily blocked the Pentagon from applying the supply chain risk label and halted enforcement of a Trump directive ordering federal agencies to stop using Anthropic’s Claude chatbot. At a July 30 hearing, she called the government’s position “really troubling” and said it appeared “at odds” with the First Amendment, adding that the record had “gotten worse for the government” as the case progressed.
Department of Justice attorneys had argued that AI models are too “staggeringly enormous and opaque” to be evaluated like physical hardware, complicating the Pentagon’s risk assessment process. Anthropic’s counsel countered that the government’s actions caused direct harm to the company and threatened to chill broader industry debate on military AI use.
An Anthropic spokesperson welcomed the ruling, saying the company remains focused on working with the government on national security AI applications. The government is expected to appeal. A separate, narrower case involving a different Pentagon rule used to pursue the supply chain risk designation remains pending before the federal appeals court in Washington, D.C.