US judge rules Trump administration acted unlawfully in targeting AI firm Anthropic

President Donald Trump listens as Defense Secretary Pete Hegseth speaks at a cabinet meeting. (AP Photo)

A US federal judge has ruled that the Trump administration acted unlawfully in targeting AI firm Anthropic after it resisted certain military uses of its models, saying national security cannot be used to justify retaliation against government critics. US District Judge Rita Lin said the government’s decision to designate Anthropic as a “supply chain risk” was unlawful and violated the company’s constitutional rights, according to the BBC.

“The empty invocation of national security is not a blank check to punish and retaliate against government critics,” Lin said in her 59-page ruling. The ruling blocks federal agencies named in Anthropic’s lawsuit from enforcing President Donald Trump’s directive restricting the use of the company’s Claude AI tools. It also overturns former Defence Secretary Pete Hegseth’s decision to classify Anthropic as a supply-chain risk — a designation generally used against companies linked to countries considered security threats. The decision makes permanent an earlier temporary suspension of the sanctions and takes effect immediately. The administration can challenge the ruling before a higher court.

Anthropic welcomed ruling

Anthropic welcomed the court decision, saying it remained committed to working with the US government on national security applications of AI. “We welcome the court’s ruling that this supply chain risk designation was unlawful,” an Anthropic spokesperson said, according to the BBC.

The dispute began after Anthropic refused to allow its AI models to be used for fully autonomous lethal weapons and mass surveillance of Americans. The company argued that its models were not sufficiently reliable for safe deployment in weapons systems and that domestic surveillance could violate constitutional rights. Trump had sharply criticised Anthropic, describing it as a “radical left, woke company” and accusing it of trying to control military activity through its terms of service.

Lin said the government's actions appeared to be aimed at punishing Anthropic for challenging the administration rather than addressing a genuine national security threat. In an earlier stage of the case, she had said the government appeared to be trying to “cripple” the company and “chill public debate” over military use of AI. The Pentagon had designated Anthropic as a supply-chain risk earlier this year, marking the first publicly known instance of an American company receiving such a designation.

Anthropic faces separate Pentagon action

The latest ruling does not resolve all of Anthropic’s legal disputes with the Pentagon. A separate action taken by the Defence Department under federal procurement rules remains in effect, with that matter still awaiting a final ruling. Anthropic’s AI systems had also been used by the US military in classified and sensitive operations, according to reports cited by the BBC.

The legal victory comes as Anthropic prepares for a potential stock market debut, which could become one of the biggest technology listings if it goes ahead.