A federal judge on Thursday barred the Trump administration from designating Anthropic a national security risk over a dispute about the use of its AI models, ruling that the designation amounted to unconstitutional retaliation.

The decision handed down by US district judge Rita Lin in California vacated the February 27 decision by defense secretary Pete Hegseth to label Anthropic a “supply-chain risk” and make the company ineligible for federal contracts. The ruling also lifted an additional punitive measure by Hegseth that prevented contractors or suppliers to the US military from doing business with Anthropic, a position Lin called “arbitrary, capricious, an abuse of discretion, and otherwise not in accordance with law.”

“Though the Department of War is undisputedly free to select the AI vendor of its choice, the evidence demonstrates that the broad measures imposed on Anthropic were illegal and baseless,” Lin wrote in a 59-page ruling.

The judge also ruled that nine agencies—including the Pentagon, the Treasury Department, the State Department, the Department of Homeland Security—had improperly imposed sanctions on Anthropic. The ruling removes those penalties.

However, Lin affirmed that the Pentagon is not required to use Anthropic’s models, and the ruling does not prevent the Pentagon from electing to simply use other models. A Pentagon spokesperson could not immediately be reached for comment, but the department is expected to appeal.

In a statement, Anthropic spokesperson Danielle Cohen said: “We welcome the court’s ruling that this supply chain risk designation was unlawful.

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