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A US federal judge ruled that sanctions the Trump administration imposed on artificial intelligence company Anthropic were unlawful, finding that the measures stemmed from retaliation over the company’s position on the military use of its technology.
In a 59-page decision issued Thursday, Judge Rita Lin barred federal agencies named in the lawsuit from enforcing President Donald Trump’s order directing government agencies to stop using Anthropic’s products. She also overturned Pentagon chief Pete Hegseth’s designation of the company as a “supply chain risk”.
The judge said the government could not use national security to justify punishing a company that had criticised its policies.
“The empty invocation of national security is not a blank check to punish and retaliate against government critics,” Lin said.
The ruling makes permanent an earlier temporary suspension of the sanctions the judge issued in March and takes effect immediately. The US government can still appeal.
Anthropic welcomed the ruling, saying it was pleased that the court had found the supply chain risk designation unlawful.
“We remain focused on working productively with the government to harness AI for our national security so all Americans benefit from this technology,” a company spokesperson said.
The dispute began after Anthropic refused to allow the US military to use its Claude artificial intelligence systems for fully autonomous lethal weapons or the mass surveillance of Americans.
The decision angered the Trump administration. Trump later described Anthropic as a “radical left, woke company” and called it “out-of-control”. Hegseth subsequently labelled the company a national security risk, a designation previously associated with foreign companies.
Lin concluded that the government’s actions were motivated less by an actual security threat and more by a desire to punish Anthropic publicly for challenging government policy. She said the sanctions were intended to make an example of the company because of its perceived “arrogance” in criticising the administration.
The dispute has also raised concerns about the wider impact on government contractors. According to the ruling, the sanctions created “ripple effects through the government contracting industry”, potentially chilling companies that might otherwise challenge government demands over technology and national security.
Anthropic’s legal victory, however, does not remove every restriction imposed by the Pentagon. A separate sanction issued under public procurement regulations remains in place while another court considers the matter.
The broader dispute comes as Anthropic and other leading AI companies face increasing scrutiny over the safety and security of increasingly powerful models. Anthropic has acknowledged that versions of Claude gained unauthorised access to external organisations during controlled testing.
The company is also reportedly preparing for a public stock market listing, which could become one of the largest technology IPOs in history.
