A federal judge ruled on Thursday that the Trump administration's designation of Anthropic as a supply-chain risk was unlawful, violating the First Amendment and the Fifth Amendment's Due Process Clause. U.S. District Judge Rita Lin found that the government's actions constituted unlawful retaliation against Anthropic for engaging in "constitutionally protected expressive activities." The ruling came after a protracted legal battle involving Anthropic, the Pentagon, and the White House, centered around the use of Anthropic's AI models in military applications. The dispute began earlier this year when Defense Secretary Pete Hegseth and Anthropic CEO Dario Amodei exchanged public statements regarding the Pentagon's use of Anthropic's models. Amodei refused to comply with Hegseth's demands that Anthropic remove restrictions on the use of its models for military applications, including fully autonomous weapons and mass surveillance. When Anthropic did not accede to these demands, President Donald Trump issued orders directing all federal agencies to halt the use of Anthropic's technology. Hegseth further instructed Defense Department contractors, suppliers, and partners to cease commercial activity with Anthropic, labeling it a supply-chain risk. Judge Lin's decision invalidated these directives, calling them "arbitrary, capricious, and in excess of statutory jurisdiction, authority, or limitations" under the Administrative Procedure Act. She emphasized that the government failed to provide adequate pre-deprivation notice or an opportunity for Anthropic to be heard, thereby violating the Fifth Amendment. Additionally, Lin ruled that the initial directive from Trump extending Anthropic's designation as a supply-chain risk to other federal agencies such as the Treasury Department and the Office of Management and Budget was also vacated, citing lack of proper jurisdiction and legal authorization. Lin permanently enjoined the Defense Department from implementing or enforcing Hegseth's directive labeling Anthropic a supply-chain risk. She ordered the department to rescind its guidance, directives, communications, or instructions related to the supply-chain designation and to take all necessary actions to prevent its implementation. The judge highlighted that the Pentagon's own records showed no prior indication of concern about Anthropic's reliability or potential supply-chain risks, suggesting the designation was politically motivated. The ruling underscored the contradiction between the supply-chain label and other government actions, such as Hegseth's proposal to apply the Defense Production Act to Anthropic, implying the company was essential to national security rather than a threat. Lin also noted that the Department of Defense continued to pursue contracts with Anthropic and collaborated with its new model, Mythos, for cybersecurity purposes, further undermining the justification for the designation. An Anthropic spokesperson welcomed the court's ruling, stating that the supply-chain risk designation was unlawful and reaffirming the company's commitment to working with the government to harness AI for national security benefits. Anthropic had previously filed two lawsuits against the Department of Defense in March, one in California and another in Washington, D.C., with the latter still pending. The ruling represents a significant legal setback for the Trump administration, which is expected to appeal the decision. Meanwhile, Anthropic continues to face challenges under a separate designation governed by a different statute within the D.C. Circuit. The outcome of these legal battles will likely influence future interactions between private AI firms and government entities concerning the regulation and application of advanced technologies.
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