Anthropic Wins First Court Battle Over Pentagon's Supply Chain Risk Label

A federal judge in California ruled on Thursday evening that the Trump administration's designation of Anthropic as a supply chain risk was illegal. The ruling marks a significant legal victory for the AI company, which had challenged the Pentagon's actions as retaliatory and unjustified. U.S. District Judge Rita Lin found that Defense Secretary Pete Hegseth's labeling of Anthropic as a national security threat constituted "unlawful retaliation" in violation of the First Amendment, and described the decision as "arbitrary and capricious." Lin also determined that Anthropic was denied due process, violating the Fifth Amendment. Earlier this year, Hegseth and President Donald Trump labeled Anthropic a supply chain risk, ordering all federal agencies—including those outside defense—to cease working with the maker of the Claude AI model. The dispute originated from Anthropic's firm stance on safety guardrails, which would have prohibited the Pentagon from using its models for fully autonomous weapons and mass surveillance of American citizens. The Pentagon denied any intention to use Anthropic's models unlawfully and alleged that Anthropic might attempt to control military use of the technology it had purchased. In her ruling, Lin noted 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 highlighted contradictions in the government's position, pointing to Hegseth's proposal to apply the Defense Production Act to Anthropic—which would treat the company as essential to national security—the Department of Defense's continued pursuit of a contract with Anthropic, and ongoing collaboration on the company's new model, Mythos, for cybersecurity purposes. Lin also emphasized that Anthropic "undisputedly lacks" backdoor access to its technology after handing it 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. "The empty invocation of national security is not a blank check to punish and retaliate against government critics." An Anthropic spokesperson welcomed the court's decision, stating, "We welcome the court's ruling that this supply chain risk designation was unlawful. 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—one in California and another in Washington, D.C. The D.C. case is still ongoing. TechCrunch has reached out to the DOD for comment.

via TechCrunch AI