A federal judge issued a decision on Thursday determining that the government violated law when it designated Anthropic as a supply chain risk earlier this year. The ruling found that officials had unlawfully retaliated against the artificial intelligence company for declining to meet Pentagon requests.
Judge Rita Lin authored a 59-page decision that prohibited federal agencies from enforcing the order to cease using Anthropic’s systems. The supply chain risk designation, which would have barred government agencies from conducting business with the company, was overturned. The designation had been issued by Defense Secretary Pete Hegseth. Lin stated that invoking national security as justification for the action “is not a blank check to punish and retaliate against government critics.”
The dispute originated from disagreements at the beginning of the year when Anthropic declined to permit the Pentagon to use its Claude AI model for fully autonomous lethal weapons systems or domestic surveillance applications. Hegseth responded by accusing the company of “arrogance and betrayal.” Lin had previously imposed a temporary restriction on the government’s actions in March, characterizing them as an apparent effort to “cripple Anthropic” for exercising constitutional rights. This week’s ruling made that temporary pause permanent, though the government retains the option to appeal the decision.
The case represents a significant win for Anthropic, which had warned that the supply chain risk designation could result in billions of dollars in losses and disrupt its business operations. An Anthropic representative stated that the company welcomed the court’s determination. The firm is planning an initial public offering later this year that could potentially value the company at approximately 2 trillion dollars.
A second legal matter involving the supply chain risk designation remains unresolved, with a three-judge panel in Washington DC set to hear arguments. Two members of that panel were appointed by the Trump administration and have indicated doubt about Anthropic’s positions. This marked the first instance of a US company being publicly classified as a supply chain risk under the government procurement statute intended to defend military infrastructure from foreign interference.
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