Anthropic said no to the Pentagon. A judge just ruled the punishment illegal.

Turning down government work is not supposed to get you branded a national security threat. A federal judge in San Francisco spent 59 pages explaining that the Pentagon did exactly that to Anthropic, and that it broke the law doing it.

U.S. District Judge Rita Lin, ruling on cross-motions for summary judgment in the Northern District of California, vacated the Defense Department's designation of Anthropic as a "supply chain risk" and blocked the government from enforcing the directives built on top of it. "The empty invocation of national security is not a blank check to punish and retaliate against government critics," Lin wrote.

How Anthropic ended up on a blacklist

In February, Defense Secretary Pete Hegseth labeled Anthropic a supply chain risk, the kind of tag that ends a company's federal business. President Trump issued a directive telling federal agencies to stop using Anthropic and its Claude models, and a separate Hegseth directive told defense contractors not to deal with the company either. A $200 million contract had already been terminated in January. Anthropic sued in March.

The trigger was a contract term. Anthropic would not agree to let the military use Claude for all lawful purposes, keeping its restrictions on mass domestic surveillance and on autonomous weapons operating without human control. CEO Dario Amodei said so publicly, and Lin's ruling turns on that public criticism.

What the order actually says

Lin found the Pentagon's measures violated the First Amendment as retaliation for protected speech, violated Fifth Amendment due process, and were arbitrary and capricious. She wrote that the actions "were based on a desire to make a public example out of Anthropic for its 'arrogance' in criticizing the government, not based on any articulable basis to believe that Anthropic would actually sabotage its model."

The order vacates the designation and bars enforcement of the directives. Anthropic gets the label off. It does not get an order forcing the Pentagon to buy from it again, and Lin has not set a date for further proceedings.

Two courts, two results

This is the second time Lin has ruled against the government in this case. On March 26 she granted a preliminary injunction, finding Anthropic likely to win on First Amendment retaliation, due process, and Administrative Procedure Act grounds.

Then on April 8, Anthropic lost in Washington. A three-judge D.C. Circuit panel denied its emergency stay request in a parallel challenge to a designation made under a different statute, the Federal Acquisition Supply Chain Security Act, which routes review straight to the appeals court. The panel said it did "not broach the merits at this time, for Anthropic has not shown that the balance of equities cuts in its favor," and noted that a stay would force the military to prolong dealings with an unwanted vendor. That case is still pending. Anthropic has one win in California and one loss in Washington over overlapping conduct under different laws.

Lin's decision can be appealed too. It came from a district court, so the government's next stop is the Ninth Circuit, and the Justice Department has signaled it intends to go there. The White House did not immediately comment when NPR asked.

What it means for the next company that says no

Anthropic said in a statement: "We are pleased the court has ruled that this supply chain risk designation was unlawful. We remain focused on working productively with the government to harness AI for our national security."

For any AI company weighing a federal contract against its own usage policy, one district court has now said the government cannot brand you a security threat for negotiating hard or for criticizing it out loud. Whether that holds is an open question, and the D.C. Circuit has already leaned the other way once.