A U.S. federal judge in San Francisco granted Anthropic a temporary reprieve from the Pentagon’s designation of the company as a supply chain risk.
In an order on Thursday, Judge Rita Lin of the U.S. District Court for the Northern District of California issued a preliminary injunction blocking the Defense Department’s label and temporarily halting a presidential directive that had told federal agencies to stop using Anthropic’s chatbot, Claude. Judge Lin wrote that “nothing in the governing statute supports the Orwellian notion that an American company may be branded a potential adversary and saboteur of the US for expressing disagreement with the government.”
Anthropic was the market leader in enterprise AI with 32% share, ahead of OpenAI’s 25%, as of 2025, according to Menlo Ventures; a government-wide ban would risk that position. The judge said the “broad punitive measures” taken by the Trump administration and Defense Secretary Pete Hegseth appeared “arbitrary, capricious, [and] an abuse of discretion.”
The ruling followed a March 9 lawsuit filed by Anthropic in federal court in Washington, DC, alleging Hegseth exceeded his authority by designating the company a national security supply chain risk.
Background: the dispute grew out of a July 2025 deal in which Anthropic and the Pentagon had negotiated for Claude to become the first frontier AI model approved for use on classified networks. Talks collapsed in February when the Pentagon sought to renegotiate, pressuring Anthropic to permit military use of Claude “for all lawful purposes” without restrictions. Anthropic maintained its technology should not be used for lethal autonomous weapons or for mass domestic surveillance of Americans.
On Feb. 27, President Trump ordered all federal agencies to cease using Anthropic products; he posted criticism of the company on Truth Social. A 90-minute hearing in San Francisco on March 24 saw Judge Lin pressing government lawyers on whether the designation and related actions punished Anthropic for publicly criticizing the Pentagon.
The court’s March 26 ruling said, “Punishing Anthropic for bringing public scrutiny to the government’s contracting position is classic illegal First Amendment retaliation.” Anthropic said it was “grateful to the court for moving swiftly, and pleased they agree Anthropic is likely to succeed on the merits.”
Screenshot from court ruling. Source: Courtlistener
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