Judge Rules Pentagon's Blacklisting of Anthropic Was Unconstitutional Retaliation

A federal judge in California ruled Thursday that the Pentagon's blacklisting of AI lab Anthropic earlier this year was unconstitutional, delivering the company a decisive legal victory in its standoff with the Trump administration over military AI use.

Judge Rita F. Lin of the U.S. District Court for the Northern District of California found that Defense Secretary Pete Hegseth's decision to designate Anthropic a "supply chain risk" — a classification typically reserved for national security threats — was "arbitrary and capricious" and constituted "unlawful retaliation in violation of the First Amendment."

"The empty invocation of national security is not a blank check to punish and retaliate against government critics," Judge Lin wrote in the ruling.

The dispute began this past winter when Hegseth moved to renegotiate all AI labs' military contracts to allow the Pentagon to use AI for "any lawful use." Most labs signed on, but Anthropic held out, insisting on two red lines: no use of its AI for mass surveillance of Americans, and no use for lethal autonomous weapons — systems capable of killing targets without human oversight.

What followed was a high-stakes pressure campaign, with Defense Department officials making insults and issuing ultimatums. Less than 24 hours before a final deadline, Anthropic CEO Dario Amodei issued a public statement reaffirming the company's stance, arguing that in a "narrow set of cases, we believe AI can undermine, rather than defend, democratic values."

The Pentagon then designated Anthropic a supply chain risk and moved to replace its influence by signing deals with seven other AI labs, including Google, Microsoft, OpenAI, and SpaceX.

Anthropic filed suit in March, and Judge Lin had already temporarily blocked the blacklist, noting at the time that the Pentagon's own records showed it designated Anthropic because of its "hostile manner through the press." "Punishing Anthropic for bringing public scrutiny to the government's contracting position is classic illegal First Amendment retaliation," she wrote then.

In response to Thursday's ruling, 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 ruling underscores a growing tension between AI labs' ethical commitments and government contracting demands, a conflict that is likely to intensify as military interest in AI grows. For developers, the case serves as a reminder that the terms under which AI models are deployed — especially in defense contexts — can become matters of public record and legal dispute.

While the military is "undisputedly free to select the AI vendor of its choice," Judge Lin wrote, the evidence here showed the "broad measures imposed on Anthropic were illegal and baseless."