US District Judge Rita F. Lin said the Defence Department’s decision to designate Anthropic as a national security “supply chain risk” violated the company’s First Amendment rights and was arbitrary and capricious. The ruling removes a major legal barrier that threatened Anthropic’s ability to work with federal agencies and defence contractors.
The 59-page decision found that the government had failed to establish an adequate national security basis for imposing sweeping restrictions on the San Francisco-based company. Lin concluded that the record instead showed the measures were connected to Anthropic’s public criticism of the Pentagon and its refusal to abandon safeguards governing how Claude could be used.
The dispute emerged from negotiations over the military deployment of advanced AI systems. Anthropic had agreed to broad national security applications but maintained two restrictions: Claude could not be used for mass domestic surveillance of Americans or for fully autonomous weapons that select and engage targets without meaningful human involvement.
Anthropic argued that current frontier models remain too unreliable to operate lethal autonomous weapons without appropriate safeguards. It also maintained that the ability of AI systems to combine large volumes of commercially available personal information could make mass surveillance far more intrusive than existing technologies.
Pentagon officials wanted contractors to permit their models to be used for any lawful military purpose. Talks reached an impasse in February, prompting Defence Secretary Pete Hegseth to announce plans to classify Anthropic as a supply chain risk.
The company formally received the designation on March 4. Such powers are intended to protect military procurement networks from suppliers considered potential security threats. Anthropic said at the time that publicly applying the mechanism to a US technology company was unprecedented and challenged the decision in court.
The designation had potentially severe commercial consequences. Anthropic had secured a Pentagon contract worth up to $200 million and had become the first major frontier AI developer to deploy its models within classified US government networks. Claude was being used for activities including intelligence analysis, modelling, operational planning and cyber operations.
The Pentagon subsequently accelerated efforts to diversify its AI suppliers. Agreements were reached with companies including OpenAI, Google, Microsoft, Amazon Web Services, Nvidia, Reflection AI and SpaceX to bring additional models into classified military environments.
Anthropic was excluded from those agreements while the dispute continued. Defence officials also began work to move military users away from Claude and towards competing systems, turning what began as a contractual disagreement into a wider confrontation over whether technology suppliers can impose ethical limits on government use of their products.
The administration argued that its decisions reflected procurement and national security considerations rather than punishment for Anthropic’s views. The judge rejected that explanation, finding insufficient evidence that the company represented the type of supply chain danger contemplated by the law.
Lin also pointed to an apparent contradiction in the government’s position. Officials had considered using the Defence Production Act to compel access to Anthropic technology while simultaneously portraying the company as a national security supply chain threat. The court said the broader restrictions imposed on the company lacked an adequate legal foundation.
The decision also blocks enforcement of measures stemming from the disputed designation, including efforts to prevent federal agencies from using Anthropic services. It strengthens the company’s position with civilian government customers and businesses performing Pentagon contracts.
Anthropic welcomed the judgment and said it remained committed to working with the government on national security while maintaining safeguards around high-risk uses of artificial intelligence.
The ruling does not end every aspect of the confrontation. Anthropic is pursuing separate litigation in Washington over another legal mechanism connected to the government’s restrictions, leaving part of the regulatory dispute unresolved. The administration could also appeal Lin’s decision.
The case has become an important test of the boundaries between executive authority and the rapidly expanding power of private AI companies. Governments increasingly depend on a small group of technology developers for models capable of processing intelligence, assisting cyber operations and supporting military planning, while those companies are simultaneously attempting to define limits on how their systems can be deployed.
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