Big victory for Anthropic: US court strikes down Pentagon blacklist over 'illegal retaliation'

A federal judge has officially struck down the Department of Defense’s attempt to blacklist artificial intelligence developer Anthropic, ruling that the Pentagon retaliated against the tech firm for standing firm on AI safety limits.

US District Judge Rita Lin delivered a 59-page decision ordering the Department of Defense to vacate its designation of Anthropic as a national security supply-chain risk and to immediately rescind all related directives against the company.

The clash erupted after Anthropic refused to allow the military to utilize its AI chatbot, Claude, for domestic surveillance or autonomous weapons systems, maintaining that current AI models are not sufficiently reliable for battlefield deployment without human oversight.

In response, Defense Secretary Pete Hegseth targeted the company using an unprecedented application of an obscure procurement statute traditionally reserved for protecting US systems from foreign sabotage.

The defense designation effectively blocked Anthropic from crucial military contracts, threatening billions of dollars in potential business and prompting the company to file suit in California federal court. Anthropic alleged that the administration violated its Constitutional rights to free speech under the First Amendment and due process under the Fifth Amendment.

Judge Lin agreed, finding that the Department of Defense acted outside legal boundaries to penalize the company rather than to address genuine national security issues.

“The empty invocation of national security is not a blank check to punish and retaliate against government critics,” Lin wrote in her ruling, adding that the official record supported an inference that the firm was targeted directly for speaking out, as per a CNBC report. “Punishing Anthropic for bringing public scrutiny to the government's contracting position is classic illegal First Amendment retaliation.”

The Justice Department had defended the Pentagon's stance, arguing that Anthropic’s refusal to lift system restrictions created operational uncertainty that risked disabling military operations, framing the conflict as a simple contractual dispute rather than a free-speech matter.

Anthropic spokesperson Danielle Cohen welcomed the court's dynamic ruling.

“While this case was necessary to protect Anthropic, our customers, and our partners, our focus remains on working productively with the government to ensure all Americans benefit from safe, reliable AI,” Cohen said as per a CNBC report.

The decision represents a major check on the military’s authority to penalize private technology vendors over political or ethical disagreements, even as Anthropic continues to navigate a parallel legal challenge in Washington, DC, regarding civilian government procurement restrictions.