Anthropic vs Pentagon: Judge rules in favour of AI company, says US govt acted ‘illegally’; all you need to know

In a major breakthrough for artificial intelligence (AI) company Anthropic, a US federal judge on Thursday (local time) ruled in favour of the company in its legal battle against the Pentagon, stating that the latter acted 'illegally' by punishing the AI company.

What did the court rule?

The ruling came after the US government, earlier this year, labelled the company as a supply chain risk, AP reported. In a written order issued on Thursday night, District Judge Rita Lin said that the Pentagon's decision to punish the company was illegal after Anthropic criticised the Department of Defense's views on the use of AI. The US government is likely to contest the ruling.

Lin wrote that the Pentagon's 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.”

Lin, an appointee of former President Joe Biden, said in a 59-page ruling that neither the US Constitution nor the federal statute the government invoked allows it to “impose sweeping penalties based principally on Anthropic’s critique of the Administration’s views.”

In a previous ruling, the district judge temporarily blocked the Pentagon from labelling the company as a supply chain risk and also blocked the enforcement of US President Donald Trump's social media directive ordering all federal agencies to stop using Anthropic and its chatbot Claude.

On 30 July, Lin noted that the US government's position was "really troubling" to her and that it seemed “at odds to me with the First Amendment.” She also said she believed the record had “gotten worse for the government” over time.

Anthropic's response to the ruling

Welcoming the ruling, an Anthropic spokesperson said in a statement, "We remain focused on working productively with the government to harness AI for our national security so all Americans benefit from this technology.”

Anthropic vs Pentagon: Here's what we know

The dispute between Anthropic and the US government began in February when President Donald Trump and Defense Secretary Pete Hegseth accused the company of endangering national security and described it as a supply chain risk. However, the company's CEO, Dario Amodei, refused to back down over concerns that its products could be used for mass surveillance or autonomous armed drones.

Later in March, the AI company sued the Pentagon following its supply chain risk designation and termed it an "unlawful campaign of retaliation" over the government's refusal to allow unrestricted military use of its technology.

The legal challenge further intensified into a public dispute over how artificial intelligence can be used in warfare and mass surveillance. OpenAI, Anthropic's primary tech industry rival, made a deal with the Pentagon hours after the government punished Anthropic for its stance.

The company has also filed a separate case against the Pentagon that is still pending in the federal appeals court in Washington. The case involves a different rule the Pentagon is using to try to declare the company a supply chain risk.

(with AP inputs)