A U.S. federal judge ruled Thursday that sanctions imposed by the Trump administration against artificial intelligence giant Anthropic were illegal, finding that the government had retaliated against the company for publicly criticizing the military.
Federal Judge Strikes Down Pentagon Blacklist of Anthropic
U.S. District Judge Rita F. Lin of the Northern District of California issued a 59-page decision concluding that the Department of Defense violated the First Amendment and the Fifth Amendment due process clause. The empty invocation of national security is not a blank check to punish and retaliate against government critics,
Judge Lin wrote.
Lin barred federal agencies named in the lawsuit from enforcing President Donald Trump’s order to stop using the tools of Anthropic, the creator of the Claude AI models, and overturned Defense Secretary Pete Hegseth’s designation of the company as a national security supply chain risk. The ruling makes permanent a temporary suspension of sanctions previously ordered in March and takes effect immediately, though the government may appeal.
Origins of the Military Contract Dispute
The conflict grew out of a contract dispute over how the Pentagon could deploy Anthropic’s Claude AI models. Earlier this winter, Hegseth moved to renegotiate AI labs’ contracts to allow the military unfettered use of technology for any lawful use.
While other labs agreed, Anthropic stood firm on two restrictions: barring its AI from being used for domestic mass surveillance or lethal autonomous weapons systems lacking human oversight.
The Pentagon argued that private companies should not be able to constrain military action, and the Justice Department contended in court filings that Anthropic’s refusal could risk disabling systems during operations. Following the breakdown in negotiations, Hegseth designated Anthropic a supply chain risk—an obscure procurement statute label historically reserved for foreign entities that threaten military systems with sabotage.
President Trump lashed out at the company on social media, describing it as “a radical left, woke company” and “out-of-control.” Lin found that the government’s designation was illegal and baseless, noting it was made based on a desire to make a public example
out of the company for its hostile manner through the press and its criticism of the administration’s views.
Legal Fallout and Ongoing Litigation
Anthropic filed lawsuits in March in California and Washington, D.C., alleging the administration violated its First Amendment right to free speech and its Fifth Amendment right to due process by failing to give the company a chance to dispute the designation.
An Anthropic spokesperson said in a statement, We welcome the court’s ruling that this supply chain risk designation was unlawful.
The company added that it remains focused on working productively with the government to harness AI for national security.
While Thursday’s ruling is a major victory that sets aside Hegseth’s supply chain risk designation and orders agencies to pull back internal directives, Anthropic still faces a second pending lawsuit in Washington, D.C., over a separate Pentagon supply-chain risk designation. Until that case is resolved, the company technically remains subject to that separate designation, which could impact civilian government contracts. The court order does not force the Defense Department to restart its work with Anthropic or use its products, leaving the agency free to select other AI vendors.
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