Judge Rules Pentagon Illegally Punished Anthropic

U.S. District Judge Rita Lin issued a 59-page order Thursday finding that the Pentagon acted illegally when it labeled AI company Anthropic a supply chain risk and imposed penalties after the company criticized the Defense Department’s views on artificial intelligence.

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.” The order blocks the Pentagon’s designation tied to an earlier directive that sought to bar federal agencies from using Anthropic’s chatbot, Claude, and rejects the federal statute the government relied on to impose those penalties.

Anthropic sued the Defense Department in March after President Donald Trump and Defense Secretary Pete Hegseth publicly accused the company of endangering national security and designated it a supply chain risk. The dispute began in February when Anthropic’s CEO, Dario Amodei, declined to allow unrestricted military use of the company’s technology, citing concerns the models could be used for mass surveillance or autonomous armed drones.

Department of Justice lawyers told the court that large AI models are “so staggeringly enormous and opaque” that the Defense Department cannot evaluate them in the same way it would a physical piece of hardware. Anthropic’s attorneys argued the government’s actions harmed the company and risked chilling debate on AI policy; attorney Michael Mongan warned the measures “threaten more broadly to chill speech and debate on a very important issue.”

An Anthropic spokesperson welcomed the ruling and said the company remains willing to work with the government on national security uses of AI. The statement added the company is focused on cooperating so Americans can benefit from the technology. The White House did not immediately respond to a request for comment.

Earlier temporary orders from Lin had blocked the Pentagon from applying the supply chain risk label and halted enforcement of a social media directive that sought to stop federal agencies from using Anthropic’s services. In a July 30 hearing, Lin described the government’s position as “really troubling” and suggested it raised First Amendment concerns.

Anthropic has also filed a separate, narrower appeal that remains pending in the U.S. Court of Appeals for the D.C. Circuit. That case involves a different Pentagon rule the administration has used in its effort to declare the company a supply chain risk. The government has indicated it will continue to contest the court’s rulings.

The public dispute highlighted disagreement between the company and the government over how private AI systems may be used in military and surveillance applications. Hours after the government moved against Anthropic earlier this year, another AI company reached a deal to work with the Pentagon. Both Anthropic and its rival are pursuing initial public offerings.