A federal judge in California has indefinitely blocked the Pentagon’s effort to “punish” Anthropic by labeling it a supply chain risk and severing government ties with the AI company, ruling that the measures adversely affect its constitutional rights.
“Nothing in the governing statute supports the Orwellian notion that an American company can be labeled a potential adversary and subversive of America simply for expressing disagreement with the government,” U.S. District Judge Rita Lynn wrote in a scathing 43-page ruling.
Lynn, appointed by former President Joe Biden, said she would delay the implementation of her decision by a week to allow the government to appeal.
But in her decision, she made it clear that she disapproved of the government’s actions, which she said violated the company’s First Amendment and due process rights.
The ruling is the latest judicial overreach against Defense Secretary Pete Hegseth as he tries to use the powerful tools at his disposal to push back against companies and individuals with whom he has feuded in recent months.
Earlier this month, a federal judge in D.C. ruled that the secretary of state violated the First Amendment rights of several journalists by imposing a restrictive new press policy. And in February, a different judge in D.C. said Hegseth violated a Democratic senator’s free speech rights over the lawmaker’s insistence on rejecting illegal orders from U.S. service members.
Anthropic praised Lin’s decision Thursday.
“We are grateful to the court for moving quickly, and are pleased that they agree that Anthropic is likely to succeed on the merits,” an Anthropic spokesperson said after Thursday’s decision. “While this matter was necessary to protect Anthropic, our customers, and our partners, our focus is on working productively with the government to ensure that all Americans can benefit from safe, trusted AI.”
The supply chain risk designation means any company working with the military must demonstrate it has not used a man-made product. The label, imposed by the Pentagon last month, had previously been used only for companies linked to foreign adversaries.
Anthropic said the designation violated its First Amendment rights, tarnished its reputation and jeopardized contracts worth millions of dollars.
The Defense Department’s feud with Anthropic began when the company refused to back down from contractual guardrails around the use of its cloud AI models in autonomous weapons and mass surveillance.
Hegseth took the dramatic, unprecedented step of calling it a supply chain risk in February, and Hegseth and President Donald Trump ordered federal agencies to stop using the product and cut ties with companies doing business with Anthropic.
But Lin said this was all in retaliation for the company sticking to its own rules.
“These sweeping measures do not appear to be directed at the government’s stated national security interests,” he wrote. “War Department records show it designated Anthropic as a supply chain risk because of its ‘hostile way through the press.'”
He said, “Punishing Anthropic for publicly investigating the government’s contracting situation is classic illegal First Amendment retaliation.”
The Defense Department wanted uninterrupted access to the cloud for “all lawful purposes”. The department said it needed complete freedom to use the system, especially in wartime.
“We cannot have a company that has a different policy preference that is included in the model … polluting the supply chain that is giving our war fighters ineffective weapons, ineffective body armor, ineffective protection,” Emil Michael, the Defense Department’s chief technology officer, told CNBC earlier this month.
But Anthropic had two red lines: It didn’t want its AI systems used in autonomous weapons or domestic mass surveillance. Anthropic argued in its lawsuit that the Pentagon was aware of its position and its stance on cloud limitations Is protected speech.
A separate challenge by the company to other authorities applied by Hegseth to give the supply chain a risk designation is still pending before a federal court in Washington, DC.
CNN has contacted the Pentagon for comment.
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