Court Rules Trump Administration's Blacklisting of Anthropic Was Unlawful Retaliation

A federal judge has ruled that the Trump administration's blacklisting of Anthropic was unlawful, delivering a significant legal victory for the AI company. In a ruling issued yesterday, Judge Rita Lin of the US District Court for the Northern District of California vacated government directives that barred federal agencies and defense contractors from using Anthropic's Claude AI models, finding that the actions constituted illegal retaliation in violation of the First Amendment.

The dispute began when Anthropic refused to lift restrictions preventing its AI models from being used in lethal autonomous weapons systems and mass surveillance of American citizens. In response, President Trump and then-Defense Secretary Pete Hegseth ordered all federal agencies to permanently stop using Anthropic's products and banned defense contractors from doing business with the company, even on non-military projects.

Judge Lin's order granted key portions of Anthropic's motion for summary judgment. She wrote that "the undisputed record shows that the challenged actions constituted unlawful retaliation in violation of the First Amendment." The judge also found that the government's actions were arbitrary and capricious, violating the Administrative Procedure Act. Her ruling noted that Anthropic does not meet the legal definition of a "supply-chain risk," which is limited to risks of sabotage or subversion by adversaries. "The plain text of the statute is directed at covert acts or hacks, not overt, public positions regarding contract terms," she wrote.

Anthropic had argued that the First Amendment protects its right to express its views on AI safety, both publicly and to the government. The company also said the supply-chain risk designation process did not conform to procedures mandated by Congress. The government, for its part, had offered what the judge described as a "slim" justification, asserting that Anthropic posed a national security risk due to potential backdoor access to its technology—a claim the judge noted the defendants have now conceded to be baseless.

The case has been closely watched by the tech industry. The Computer & Communications Industry Association, a trade group, said it was "encouraged by this outcome, as this case matters to anyone doing business with the US government. By bypassing standard procurement to target Anthropic in this fashion, the Pentagon's action deeply concerned any company that has contracts with the government."

The administration may appeal the ruling, and an ongoing appeal in the DC Circuit Court of Appeals remains. Despite the ban, some government agencies reportedly continued to use Anthropic's tools even as relations between the White House and the company thawed ahead of Anthropic's planned IPO. In a statement, Anthropic 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."