Federal Judge Rules Trump Administration’s Blacklisting of AI Lab Anthropic Illegal

A federal judge in California on Thursday ruled that the Trump administration’s blacklisting of artificial intelligence company Anthropic was illegal, granting the AI lab a sweeping legal victory in a dispute over military use of its technology.

U.S. District Judge Rita Lin in the Northern District of California ordered the Trump administration to vacate the supply-chain risk designation and rescind all directives that barred federal agencies and defense contractors from working with Anthropic. The ruling grants key portions of the summary judgment motion Anthropic filed in March.

“The undisputed record shows that the challenged actions constituted unlawful retaliation in violation of the First Amendment,” Lin wrote. She also found the designation was “arbitrary and capricious” and that Anthropic was denied due process under the Fifth Amendment.

The case stems from a conflict that escalated early this year. Defense Secretary Pete Hegseth moved to renegotiate all AI labs’ contracts with the Pentagon to allow use for “any lawful purpose.” Most major AI companies agreed, but Anthropic refused to drop two restrictions: a ban on using its models for lethal autonomous weapons — AI systems capable of killing without human oversight — and a ban on use for mass surveillance of American citizens.

In response, President Donald Trump and Hegseth in February labeled Anthropic a supply-chain risk — a classification typically reserved for foreign national security threats. They ordered all federal agencies to permanently stop using Anthropic’s products and banned defense contractors from any business with the company, even unrelated to the military.

The Pentagon argued it would use Anthropic’s technology only for lawful purposes and accused the company of trying to control military use of models the government had paid for. But Lin rejected that justification, noting the government’s own actions contradicted the supply-chain risk label.

She pointed to Hegseth’s proposal to apply the Defense Production Act to Anthropic, a move that would have classified the company as essential to national security rather than a threat to it. She also noted the Department of Defense continued pursuing a contract with Anthropic and collaborated with the company on a new model called Mythos for cybersecurity purposes, according to the ruling.

Lin further highlighted that the government had “backed away” from its initial risk assessment, which claimed Anthropic could access its technology after deployment in national security systems. “It is now clear that Anthropic undisputedly lacks any such access,” Lin wrote, adding that the company’s technology is “no riskier to the national security than any other ‘black box’ artificial intelligence model.”

“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, using the Trump administration’s preferred name for the Defense Department.

“The empty invocation of national security is not a blank check to punish and retaliate against government critics,” she added.

The ruling is the latest development in a monthslong conflict that saw the Pentagon sign deals with seven other AI labs, including Google, Microsoft, OpenAI, and SpaceX, according to The Verge. Anthropic CEO Dario Amodei issued a public statement shortly before the blacklist was imposed, writing that the company had “never raised objections to particular military operations” but believed AI could “undermine, rather than defend, democratic values” in a narrow set of cases, as reported by The Verge.

Anthropic filed two complaints against the Department of Defense in March — one in California and one in Washington, D.C. The D.C. suit remains ongoing, according to TechCrunch.

In a statement shared with TechCrunch and The Verge, an Anthropic spokesperson said: “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.” The Verge identified the spokesperson as Danielle Ghiglieri.

The ruling sets a significant precedent for tech regulation, establishing that the government cannot use national security designations to retaliate against companies that set ethical restrictions on the use of their AI systems. The Department of Defense did not immediately respond to requests for comment.