Judge Says Trump Admin Was Wrong to Blacklist Anthropic

A federal judge has determined that the Defense Department acted unlawfully when it moved to bar AI firm Anthropic from doing business with the U.S. military.

In a 59-page ruling released last Thursday evening, District Judge Rita Lin rejected the Defense Department’s decision to classify Anthropic as a supply-chain security threat. The ruling represents a significant development in the dispute between the company and the U.S. government over how AI should be used in military operations.

Lin said the Pentagon had effectively punished Anthropic after the company publicly challenged the department’s approach to deploying AI in combat and surveillance. She warned that national security concerns could not be used as a justification for retaliating against companies that criticize government policy.

Anthropic brought the case in federal court in California, arguing that Pete Hegseth, the Defense Secretary, exceeded his legal authority by declaring the company a supply-chain security concern. The designation prevented Anthropic from securing military contracts and followed the company’s refusal to permit its Claude systems to be used for U.S. autonomous weapons or surveillance.

The company has maintained that current AI systems are not dependable enough to operate weapons without human control. It has also opposed the use of its technology for domestic surveillance. Pentagon officials, meanwhile, have argued that private technology firms should not be able to impose restrictions on legitimate military operations.

Anthropic executives previously stated that the government’s action could result in billions of dollars in lost commercial opportunities.

At a July 30 hearing, Lin expressed serious doubts about the government’s position, describing it as troubling and suggesting that it conflicted with constitutional protections for free expression. She also said the evidence presented by the government had become less convincing as the case progressed.

Justice Department attorneys defended the Pentagon’s position during the hearing, arguing that modern AI systems are exceptionally complex and difficult to assess using standards traditionally applied to physical military equipment.

Anthropic welcomed the decision and said it would continue seeking constructive cooperation with the government on the use of AI for national security.

The Pentagon’s designation was reportedly the first public use of an obscure procurement authority to identify a U.S. company as a supply-chain security risk. The law is intended to protect military systems from threats including foreign interference and sabotage.

Anthropic’s lawsuit also accused the government of violating its constitutional rights to due process and free speech. The company argued that officials had acted against it because of its position on AI safety without giving it a meaningful opportunity to challenge the designation.

The Pentagon had not immediately issued a response to the ruling. AI entities like D-Wave Quantum Inc. (NYSE: QBTS) are likely to welcome the court decision because it reaffirms that authorities cannot wantonly take unwarranted punitive actions against businesses that don’t agree with the way the government wants to use their products.

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