A federal judge has called the Department of Defense's designation of Anthropic as a national security supply-chain risk 'illegal and baseless.' Anthropic CEO Dario Amodei had been at the center of a dispute with the Pentagon over the use of the company's AI models. The decision, handed down by US district judge Rita Lin in California, vacated the February 27 decision by defense secretary Pete Hegseth to label Anthropic a 'supply-chain risk' and make the company ineligible for federal contracts.
The ruling also lifted an additional punitive measure by Hegseth that prevented contractors or suppliers to the US military from doing business with Anthropic, a position Lin called 'arbitrary, capricious, an abuse of discretion, and otherwise not in accordance with law.' The judge ruled that nine agencies - including the Pentagon, the Treasury Department, the State Department, and the Department of Homeland Security - had improperly imposed sanctions on Anthropic.
The case stems from a bitter dispute earlier this year between the Pentagon and Anthropic over a $200 million deal to use the AI lab's Claude models for military applications. The rift began after reports that the US had used Claude in the operation to capture Venezuelan president Nicolás Maduro. After the operation, a Palantir employee relayed concerns from an Anthropic staffer to US officials about how its models had been used.
In negotiations, Anthropic insisted on certain limits on how its models could be deployed, including support for lethal autonomous weapons and mass surveillance systems. But Hegseth rejected any curbs, contending that a contractor could not dictate how the technology could be used once deployed and insisting the contract allowed 'all lawful use.' After negotiations broke down in February, Hegseth was widely seen as punishing Anthropic by designating it a 'supply-chain risk,' a national security tool that blacklisted the company from doing business with the federal government.
Anthropic filed two lawsuits in response - one in federal district court in California and one at the US Court of Appeals for the District of Columbia - accusing the Pentagon of violating its First and Fifth Amendment protections on ideological grounds. The DC case is ongoing. Anthropic's top AI models are considered some of the best in the world, and the company's models recently became subject to the Trump administration's AI oversight framework due to their powerful capabilities.
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