A Northern California judge found that the AI company’s products did not represent a meaningful threat to national security, making the Pentagon’s designation “unlawful retaliation.” #
Anthropic secured a legal victory in its case against the Department of Defense for designating the company as a supply chain risk earlier this year, a move that hindered the company’s ability to work with government clients and compete economically.
In a ruling released Thursday evening, Judge Rita Lin of the U.S. District Court in the Northern District of California sided with Anthropic following a dispute between the company and the Pentagon over how its technology was used in agency missions, specifically those involving mass surveillance and autonomous weaponry.
“Though the Department of War is undisputedly free to select the AI vendor of its choice, the evidence demonstrates that the broad measures imposed on Anthropic were illegal and baseless,” Lin’s judgment read.
A key finding in the ruling was that Anthropic’s products did not constitute a meaningful threat to national security, thus, labeling the company a supply chain risk was “unlawful retaliation” and a violation of Anthropic’s First Amendment right. Additionally, the ruling found that Anthropic was also denied its pre-deprivation process required under the Fifth Amendment, which states that no person shall be deprived of life, liberty or property without due process of law.
The ruling also addressed the public statements made by both parties. Lin found that the Pentagon’s statements, specifically those related to the “arrogance” of Anthropic for expressing concern over its products' usage, indicated that the Trump administration’s efforts to blacklist Anthropic had less to do with national security and artificial intelligence model concerns than retaliation.
“The empty invocation of national security is not a blank check to punish and retaliate against government critics,” the judgment continued. “An IT vendor does not become a potential adversary of the United States whenever it asks probing questions or stubbornly insists on particular contracting terms, even if doing so causes DoW to doubt its trustworthiness. Such a breathtakingly broad interpretation of Section 3252 would make its restrictions on the Secretary’s discretion meaningless.”
Following the release of the judgment, Anthropic said it welcomes the court’s ruling that found the supply chain risk label illegitimate.
“We remain focused on working productively with the government to harness AI for our national security so all Americans benefit from this technology,” an Anthropic spokesperson told Nextgov/FCW.
The Pentagon did not return a request for comment by the time of publication.
The ruling in favor of Anthropic will likely bolster confidence within the larger technology vendor ecosystem. In the wake of the initial supply chain risk label and further export controls on newer models, vendors were shaken by the Trump administration’s actions, citing uncertainty over the future of new and existing contracts with the government.
“Contractors fear their past corporate decisions or public stances are scrutinized through new lenses from the administration, the fear that you can be disqualified for lack of integrity or lack of compliance with those views, not because you've done a poor job,” a source in the tech contracting industry told Nextgov/FCW in April.
Business advocacy groups like the Information Technology Industry Council addressed this lack of clarity, seeing the ruling as preserving the relationship between the public and private sectors.
“Importantly, yesterday’s ruling removes uncertainty for businesses across industry seeking to partner with the U.S. government,” said ITI President and CEO Jason Oxman in a statement.
The future of government tech contracting stands to change following the Anthropic-Pentagon dispute. Defense Under Secretary for Research and Engineering Emil Michael, who was referenced many times in the ruling, said in May that the Pentagon will “never again” be beholden to a single vendor.
“We were single-threaded on one vendor, one AI vendor at the Department of War, and to integrate into classified systems is not just putting your software on a public cloud and having it work,” Michael said, referring to Anthropic. “But never again will we be single-threaded with any one model.”