Anthropic Supply-Chain Risk Designation Halted By Judge

Anthropic won a preliminary injunction barring the US Department of Defense from labeling it a supply-chain risk, potentially clearing the way for customers to resume working with the company. The ruling on Thursday by Rita Lin, a federal district judge in San Francisco, is a symbolic setback for the Pentagon and a significant boost for the generative AI company as it tries to preserve its business and reputation.

“Defendants’ designation of Anthropic as a ‘supply chain risk’ is likely both contrary to law and arbitrary and capricious,” Lin wrote in justifying the temporary relief. “The Department of War provides no legitimate basis to infer from Anthropic’s forthright insistence on usage restrictions that it might become a saboteur.”

Anthropic and the Pentagon did not immediately respond to requests to comment on the ruling.

The Department of Defense, which calls itself the Department of War, has relied on Anthropic’s Claude AI tools for writing sensitive documents and analyzing classified data over the past couple of years. But this month, it began pulling the plug on Claude after determining that Anthropic could not be trusted. Pentagon officials cited numerous instances in which Anthropic allegedly placed or sought to put usage restrictions on its technology that the Trump administration found unnecessary.

The administration ultimately issued several directives, including designating the company a supply-chain risk, which have had the effect of slowly halting Claude usage across the federal government and hurting Anthropic’s sales and public reputation. The company filed two lawsuits challenging the sanctions as unconstitutional. In a hearing on Tuesday, Lin said the government had appeared to illegally “cripple” and “punish” Anthropic.

Lin’s ruling on Thursday “restores the status quo” to February 27, before the directives were issued. “It does not bar any defendant from taking any lawful action that would have been available to it” on that date, she wrote. “For example, this order does not require the Department of War to use Anthropic’s products or services and does not prevent the Department of War from transitioning to other artificial intelligence providers, so long as those actions are consistent with applicable regulations, statutes, and constitutional provisions.”

The ruling suggests the Pentagon and other federal agencies are still free to cancel deals with Anthropic and ask contractors that integrate Claude into their own tools to stop doing so, but without citing the supply-chain risk designation as the basis.

The immediate impact is unclear because Lin’s order won’t take effect for a week. And a federal appeals court in Washington, DC has yet to rule on the second lawsuit Anthropic filed, which focuses on different law under which the company was also barred from providing software to the military.

But Anthropic could use Lin’s ruling to demonstrate to some customers concerned about working with an industry pariah that the law may be on its side in the long run. Lin has not set a schedule to make a final ruling.