US Court Rules Trump Administration’s Supply-Chain Risk Label on Anthropic Was Unlawful

A United States federal judge in California has determined that the Trump administration acted unlawfully by designating artificial intelligence company Anthropic as a national security supply-chain risk.

What Happened

U.S. District Judge Rita Lin delivered a ruling on Thursday evening finding that Defense Secretary Pete Hegseth’s designation of Anthropic constituted unlawful retaliation under the First Amendment and was arbitrary and capricious. Judge Lin also concluded that the maker of the Claude AI model was deprived of due process protected by the Fifth Amendment.

Earlier this year, President Donald Trump and Defense Secretary Hegseth imposed the supply-chain risk label on Anthropic and directed all federal departments, including civilian agencies outside of the defense sector, to cease operations with the firm. The friction originated over Anthropic’s policies regarding safety boundaries, which restricted the Pentagon from utilizing its AI systems for mass surveillance of American citizens or for fully autonomous weaponry.

The Pentagon contested Anthropic’s stance, asserting that it only intended to use the models for lawful objectives, while arguing that Anthropic could attempt to maintain ongoing control over systems the military had purchased.

Key Highlights

• Judge Lin ruled that the administration’s actions violated both the First and Fifth Amendments.
• The court identified significant inconsistencies in the government’s approach, noting that Hegseth had previously suggested invoking the Defense Production Act regarding Anthropic, an action indicating the company was critical to national security rather than a risk.
• The Department of Defense continued pursuing a contract with Anthropic and cooperated with the company on cybersecurity initiatives using its Mythos model despite the designation.
• The ruling stated Anthropic indisputably does not have backdoor access to its technology once provided to defense authorities.
• The court emphasized that invoking national security cannot serve as a blank check to retaliate against critics.

Why This Matters

The ruling clarifies legal limits on executive authority when applying national security designations to private technology providers. Judge Lin noted that while defense officials have the right to choose which AI vendors they work with, the expansive measures taken against Anthropic lacked a legal and factual foundation. The court concluded the government’s rhetoric and actions evidenced an attempt to make an example of Anthropic due to its criticism of government policies.

What to Watch Next

Anthropic originally submitted two separate legal challenges against the Department of Defense in March, one in California and another in Washington, D.C. While the California court has issued this ruling, the legal proceedings in Washington, D.C., remain ongoing. The Department of Defense had not provided comment at the time of reporting.

Frequently Asked Questions

Why did the Pentagon label Anthropic as a supply-chain risk?

The label followed a dispute where Anthropic established strict safety boundaries preventing its AI models from being deployed for mass surveillance of American citizens or in fully autonomous weapons systems, leading defense leadership to accuse the firm of seeking improper control over purchased tools.

What did the federal court decide?

U.S. District Judge Rita Lin ruled that the supply-chain risk label was illegal, arbitrary and capricious, and represented unconstitutional retaliation under the First Amendment alongside a violation of Fifth Amendment due process protections.

Is the litigation completely concluded?

No. While Anthropic obtained a favorable decision in the California federal court, a companion lawsuit filed by the company in Washington, D.C., is still pending.

Source: Reporting based on court documents and TechCrunch.