Federal judge rules Pentagon's Anthropic risk label unlawful

U.S. District Judge Rita Lin ruled on Thursday evening that Defense Secretary Pete Hegseth’s labeling of Anthropic as a national security risk constituted “unlawful retaliation” in violation of the First Amendment and was “arbitrary and capricious.” Lin also found that Anthropic was denied due process as required under the Fifth Amendment. Earlier this year, Hegseth and President Donald Trump had labeled Anthropic a supply-chain risk and ordered all federal agencies, including those outside defense, to stop working with the Claude maker.

The dispute stemmed from Anthropic setting hard limits on certain safety guardrails that would have let the Pentagon use its models for fully autonomous weapons and mass surveillance of American citizens. The Pentagon denied it would use Anthropic’s models for anything but lawful purposes and alleged that Anthropic could try to control the military’s use of models it had bought and paid for.

In her ruling, Lin wrote that the government’s “words and deeds confirm that the challenged actions were based on a desire to make a public example out of Anthropic for its ‘arrogance’ in criticizing the government.” She pointed to inconsistencies between the supply-chain label and the government’s other actions, including Hegseth’s proposal to apply the Defense Production Act to Anthropic — which would mean the company was essential to national security rather than a threat to it — as well as the Department of Defense’s continued pursuit of a contract with the company and government collaboration with Anthropic’s new model, Mythos, for cybersecurity. Lin also said it is clear that Anthropic “undisputedly lacks” any backdoor access to its technology once it is handed over to the DOD. “Though the Department of War is undisputedly free to select the AI vendor of its choice, the evidence demonstrates that the broad measures imposed on Anthropic were illegal and baseless,” Lin wrote, adding that “the empty invocation of national security is not a blank check to punish and retaliate against government critics.”

“We welcome the court’s ruling that this supply chain risk designation was unlawful,” an Anthropic spokesperson said in a statement. “We remain focused on working productively with the government to harness AI for our national security so all Americans benefit from this technology.” Anthropic filed two complaints against the DOD in March, in California and Washington, D.C.; the D.C. suit is still ongoing. TechCrunch has reached out to the DOD for comment.

Why it matters

The ruling curbs the government’s ability to use national-security designations to punish AI companies for pushing back on safety demands, a precedent that could shape how far federal agencies can go in pressuring AI vendors going forward.