Judge blocks Pentagon bid to label Anthropic a national security ‘supply chain risk’

An anonymous reader quotes a report from The Guardian: A US judge ruled on Thursday that the Trump administration broke the law when it designated Anthropic as a supply chain risk earlier this year, finding that the government had unlawfully targeted the AI firm for refusing to comply with defense department demands. "The empty invocation of national security is not a blank check to punish and retaliate against government critics," Judge Rita Lin said in a 59-page decision. Lin's ruling barred the federal agencies named in the lawsuit from enforcing Donald Trump's order to stop using Anthropic's tools and overturned the designation of the company as a "supply chain risk" by the defense secretary, Pete Hegseth. The status, usually reserved for foreign firms, would have blocked government agencies from doing business with Anthropic. The case emerged out of a months-long feud between Anthropic and the Pentagon at the start of the year. Anthropic refused to allow the government to use its Claude AI model for fully autonomous lethal weapons or domestic mass surveillance, resulting in Hegseth accusing the company of "arrogance and betrayal". Lin put a temporary pause on the government's punitive measures in March, stating that the government's actions looked like an attempt to "cripple Anthropic" for exercising its first amendment rights. The ruling this week makes that temporary suspension permanent, although the government may appeal. "We welcome the court's ruling that this supply chain risk designation was unlawful," an Anthropic spokesperson said. Read more of this story at Slashdot.

Judge Rules Trump Admin Illegally Retaliated Against Anthropic Over AI Red Lines Via Decrypt.co, In brief Judge Rita Lin granted Anthropic summary judgment on its First Amendment, due process and Administrative Procedure Act claims in a 59-page order. The government conceded Anthropic has no backdoor access to deployed models and is no riskier than any other AI system. Anthropic lost on one count, its claim that Trump's directive to federal agencies exceeded presidential power. A federal judge has ruled that the Trump administration illegally punished Anthropic for publicly refusing to let the military use its Claude LLM for tasks including mass surveillance of Americans and lethal autonomous warfare. The dispute began when the Pentagon told Anthropic to strip all usage restrictions and accept a clause permitting "all lawful uses." Anthropic dropped most of them and held two red lines. On February 27, Trump ordered every federal agency to stop using the company's technology, calling it a "RADICAL LEFT, WOKE COMPANY" on Truth Social. Hegseth followed, accusing Anthropic in a tweet of "a master class in arrogance and betrayal" and barring any military contractor from doing business with it. What the record showed The government has since abandoned its central claim. Its risk assessment rested on Anthropic having backdoor access to deployed models, and it now concedes Anthropic has no such access and that Claude is no riskier than any other "black box" system. That left one factor: trust, forfeited by what a Pentagon memo called Anthropic's "increasingly hostile manner through the press." Lin found the timeline gave that away. Days before the blacklisting, Hegseth had floated invoking the Defense Production Act, which would have made Anthropic essential to national security. The day after the designation, an under secretary emailed the company to say a contract was "very close." The government is still discussing collaboration on Mythos, Anthropic's newest model, across sensitive contexts, Lin added. "The empty invocation of national security is not a blank check to punish and retaliate against government critics," Lin wrote, finding the actions retaliatory under the First Amendment, imposed without the pre-deprivation process the Fifth Amendment requires, outside the supply chain statute, and arbitrary and capricious. Anthropic did not win everything. Lin rejected its argument that Trump's directive exceeded presidential authority, and entered judgment for agencies that took no action. She vacated the designation and Hegseth's boycott order, granted a permanent injunction, and denied the government's request for a seven-day administrative stay, noting it had operated under a preliminary injunction since March without identifying any harm. Anthropic told the court the measures, left standing, would cut its defense-related revenue by 50% to 100% and its 2026 revenue by billions. Tyler Durden Fri, 08/28/2026 - 10:15

A federal judge has ruled in favor of artificial intelligence company Anthropic in its legal battle against the Pentagon after the government labeled the company as a supply chain risk earlier this year.U.S. District Judge Rita Lin issued a written order Thursday night that the Pentagon acted illegally by punishing the AI company for its criticism of the Department of Defense’s views on AI use. The government is expected to fight the ruling.The dispute between the AI company and the government broke out in February when President Donald Trump and Defense Secretary Pete Hegseth accused Anthropic of endangering national security and designated the company a supply chain risk. Anthropic CEO Dario Amodei refused to back down over concerns the company’s products could be used for mass surveillance or autonomous armed drones.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.”An Anthropic spokesperson said in a statement that they welcome the judge’s ruling: “We remain focused on working productively with the government to harness AI for our national security so all Americans benefit from this technology.”The White House did not immediately respond to a request for comment.In the 59-page ruling, Lin, an appointee of former President Joe Biden, wrote that neither the Constitution nor the federal statute the government invoked allows them to “impose sweeping penalties based principally on Anthropic’s critique of the Administration’s views.”Anthropic sued the Pentagon over the supply chain risk designation in March for what it called an “unlawful campaign of retaliation” over its refusal to allow unrestricted military use of its technology.The legal challenge intensified an unusually public dispute over how AI can be used in warfare and mass surveillance. Anthropic’s primary tech industry rival, ChatGPT maker OpenAI, made its own deal to work with the Pentagon just hours after the government punished Anthropic for its stance.Anthropic and OpenAI are each ramping up for buzzy initial public offerings.Anthropic has also filed a separate and narrower case that is still pending in the federal appeals court in Washington, D.C. That case involves a different rule the Pentagon is using to try to declare Anthropic a supply chain risk.Earlier in the legal proceedings, Lin had temporarily blocked the Pentagon from labeling the company as a supply chain risk and blocked enforcement of Trump’s social media directive ordering all federal agencies to stop using Anthropic and its chatbot Claude.In a hearing July 30, Lin had said that the government’s position was “really troubling” to her and that it seemed “at odds to me with the First Amendment.” She also said she believed the record had “gotten worse for the government” over time.In that same hearing, Department of Justice lawyers argued that the nature of AI models is “so staggeringly enormous and opaque” that the Defense Department cannot evaluate it in the same way it would a physical piece of hardware.Anthropic lawyer Michael Mongan said in that hearing that the government’s actions “profoundly harm Anthropic” and that they “threaten more broadly to chill speech and debate on a very important issue.”Anthropic has also filed a separate and narrower case that is still pending in the federal appeals court in Washington, D.C. That case involves a different rule the Pentagon is using to try to declare Anthropic a supply chain risk. —Kaitlyn Huamani, AP Technology Writer

A federal judge in California has handed Anthropic a significant legal victory, blocking the Pentagon's attempt to designate the AI company as a national security risk over a dispute involving military use of its Claude chatbot.Judge Rita Lin of the US District Court for the Northern District of California granted Anthropic a preliminary injunction, halting the Department of Defense's 'supply chain risk' designation while the company's broader lawsuit against the government proceeds. FT reports Lin found that the designation was likely both contrary to law and arbitrary and capricious.OpenAI CFO Sarah Frier Tells Employees Not To Worry About Anthropic's IPO Timeline, Says Company Is 'Running Its Own Race'In her order, the judge reportedly also concluded that penalising Anthropic for drawing public attention to the government's contracting stance amounted to unlawful First Amendment retaliation. The injunction stops the administration from enforcing a related presidential directive that barred federal agencies from using Anthropic's Claude models.How the dispute beganThe clash traces back to a $200 million contract Anthropic signed with the Pentagon last year. Talks over deploying Claude on the Pentagon's GenAI.mil platform stalled after the Department of Defense sought unrestricted access to Anthropic's models for all lawful purposes, while Anthropic insisted on guarantees that its technology would not be used for fully autonomous weapons systems or domestic mass surveillance.With negotiations breaking down, Defense Secretary Pete Hegseth formally labelled Anthropic a supply-chain risk in early March, invoking a little-used procurement statute intended to guard military systems against foreign sabotage. Reports noted this marked the first time a US company had been publicly designated a supply chain risk under that statute. The designation effectively barred the Pentagon and its contractors from using Anthropic's products.Anthropic's Revenue Run Rate Tops $65 Billion Ahead Of Expected IPOAnthropic takes the fight to courtAnthropic responded by filing two separate lawsuits - one in California federal court and another before the federal appeals court in Washington, DC - arguing that the government's actions were unconstitutional. The company argued that the Constitution does not permit the government to punish a firm for its protected speech, and that no federal statute authorised the steps taken against it.The lawsuits alleged violations of both the First Amendment's free speech protections and the Fifth Amendment's due process guarantees. Anthropic maintained that it had a constitutional right to express its views, both publicly and to the government, about the limits of its own AI systems and broader AI safety concerns.Civil liberties groups backed the company's position. The ACLU's Patrick Toomey said AI-powered surveillance poses serious dangers to democracy and argued that Anthropic's advocacy for safety guardrails was protected speech that the Pentagon should not be punishing.Wider industry falloutThe standoff drew in rivals as well. OpenAI struck its own deal to work with the Pentagon within hours of the government's action against Anthropic, underscoring how the episode intensified an already public debate over AI's role in warfare and surveillance.The preliminary injunction does not end the case outright. It pauses the Pentagon's designation and the presidential directive while litigation continues.