A federal court on Thursday ruled that the Pentagon acted illegally when it blacklisted Anthropic S. government, months after the AI company sued the Defense Department alleging that it was a target of unlawful retaliation for its stance on safeguards for military use of its technology.

In her ruling, California federal judge Rita Lin wrote that the record shows the Pentagon’s actions “constituted unlawful retaliation in violation of the First Amendment,” and labeled Defense Secretary Pete Hegseth’s blacklisting decision as “arbitrary and capricious.” The judge noted that the government’s submissions defending its decision were “slim” and noted that the Pentagon’s words and actions show that the blacklisting was based on a “desire to make a public example out of Anthropic for its ‘arrogance’ in criticizing the government.” Lin cited the contradiction between the blacklisting and Hegseth’s earlier threat to use the Defense Production Act against Anthropic, which implied the company was “essential to national security rather than a threat to it.” The judge noted that the Defense Department is free to select the AI vendor of its choice; the evidence in the case showed that the “broad measures imposed on Anthropic were illegal and baseless.” Thursday’s ruling is a major legal win for Anthropic in its clash with the Pentagon and the Trump administration.

The company has also filed a second legal case on the matter before the D.C. federal appellate court, the court decision for which is pending. The case covers a different rule the Defense Department is relying on to label Anthropic as a supply chain risk.

For related coverage, explore our detailed analysis on Technology and Digital Systems.

It’S Unclear Trump Administration Updates

It’s unclear if the Trump administration will wait for a decision in the second case before appealing Lin’s judicial determination. The clash between Anthropic and the Pentagon stems from the Claude AI maker’s refusal to agree to terms of a deal following disagreements over the use of AI in fully autonomous weapons and domestic surveillance.

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In a statement issued in February, Anthropic CEO Dario Amodei laid out the company’s red lines and said it “cannot in good conscience accede” to the Pentagon’s request to remove its safeguards and allow “any lawful use” of its AI tools.

While highlighting the work the company does done with the U.S. military and intelligence community, Amodei said there are a “narrow set of cases, we believe AI can undermine, rather than defend, democratic values.” To address this, Anthropic said its contracts with the DoD have included two safeguards that prevent the use of their AI in “mass domestic surveillance” and “fully autonomous weapons,” where no human involvement is needed for deployment.

President Donald Trump also chimed in on this matter at the time, saying his government would “NEVER ALLOW A RADICAL LEFT, WOKE COMPANY TO DICTATE HOW OUR GREAT MILITARY FIGHTS AND WINS WARS.” Later in March, the Pentagon formally informed Anthropic that it had been designated as a supply chain risk. In a statement issued to multiple outlets after the ruling, Anthropic said it welcomed the court’s ruling on the supply chain risk designation being unlawful, and added: “We remain focused on working productively with the government to harness A.I.

National Security Americans Benefit Updates

for our national security so all Americans benefit from this technology.” Pentagon Officially Tells Anthropic It’s A Supply Chain Risk (Forbes) OpenAI And Google Staffers Urge Limits On Pentagon’s AI Use In Petition (Forbes)