SAN FRANCISCO — A federal judge in California granted Anthropic an emergency reprieve on Thursday from the Pentagon’s unprecedented designation of the company as a supply chain risk.
U.S. District Judge Rita Lin wrote in a 43-page order that punishing the artificial intelligence company for bringing public scrutiny to the government’s contracting position — “an inference” that she said the court record supports — is “classic illegal First Amendment retaliation.”
Anthropic CEO Dario Amodei had laid out in a public post earlier this year that he wouldn’t allow the Pentagon to use the company’s AI tools for mass domestic surveillance or to empower autonomous weapons, while Defense Secretary Pete Hegseth insisted that the government needed unrestricted access for all “lawful purposes.”
By granting Anthropic’s request, Lin removed the stigma of the designation at least temporarily, while giving the company something tangible to show customers as it tries to recover its business and reputation. The label has never been applied to an American company before Anthropic and is typically reserved for foreign firms with ties to U.S. adversaries, like China’s Huawei.
Anthropic sued the Pentagon earlier this month on claims that its First Amendment and due process rights were violated with the label, following the tumultuous contracting dispute.
While Lin issued a preliminary injunction requiring the Trump administration to lift its ban on the AI company, she put her ruling on hold for a week to allow the Justice Department to appeal. She is also requiring the government to provide a report by April 6 on how it plans to comply with her order.
In her decision, Lin pointed to statements from President Donald Trump and Hegseth, where they called Anthropic “out of control” and “arrogant,” describing the company’s “sanctimonious rhetoric” as an attempt to “strong-arm” the government.
Before the Pentagon formally issued its supply chain risk designation, Trump ordered all federal agencies to cease using Anthropic products. Hegseth posted a sweeping directive on social media to prohibit any Pentagon “contractor, supplier, or partner” from working with Anthropic, which the government’s lawyers later told Lin was not meant to be taken at face value or as legally binding.
Anthropic celebrated the early win on Thursday.
“We’re grateful to the court for moving swiftly, and pleased they agree Anthropic is likely to succeed on the merits,” a company spokesperson said in a statement. “While this case was necessary to protect Anthropic, our customers, and our partners, our focus remains on working productively with the government.”
The Justice Department did not immediately comment on the order Thursday. It indicated earlier that the government would appeal.
Lin had appeared sympathetic to Anthropic during the company’s first court hearing in the case on Tuesday in San Francisco, saying that an unprecedented decision by the Pentagon to blacklist company products “looks like an attempt to cripple” it.
The Biden appointee also questioned at the time the government’s rationale for taking such an extreme step. Lin said the implication from DOJ attorney Eric Hamilton seemed to be that a vendor’s stubbornness, pushing back on terms and raising concerns, could be enough to deem it untrustworthy, a threshold she viewed as a low bar.
Lin stood by the skepticism on Thursday, writing in her order that “nothing in the governing statute supports the Orwellian notion that an American company may be branded a potential adversary and saboteur of the U.S. for expressing disagreement with the government.”
There are still other factors that could complicate the relief the order might provide in practice. Anthropic filed a second lawsuit in the D.C. Circuit Court of Appeals, where it has also requested an injunction, and could get split decisions from the different judges.
Lin reiterated that she’s focused on determining whether the government broke the law and wouldn’t be touching the novel public policy question the case also grapples with. That debate — over whether a private company can dictate how the military uses its technology — has gripped the AI industry.
Employees at competitors Google and OpenAI, multiple tech industry associations as well as Microsoft had all filed amicus briefs supporting Anthropic’s request for an injunction.
Some of those industry groups like the Software & Information Industry Association and the Computer & Communications Industry Association cheered the pause Thursday.
“The procurement framework Congress built over decades exists for a reason,” SIIA President Chris Mohr said in a statement. “When that framework can be discarded without following those rules, the entire ecosystem is threatened.”
CCIA President Matt Schruers described the designation as “political retaliation against free enterprise” and said he was relieved to see it met with “considerable judicial scrutiny.”