In the U.S., federal judge Rita Lin ruled that the Defense Department’s decision to label AI company Anthropic a “supply chain risk” was unlawful. The ruling renewed attention on the commercial consequences of the official move, which followed the company’s refusal to allow military use of its AI models in areas such as surveillance or autonomous weapons.

The court emphasized that the Defense Department could not use national security as a reason to punish the company. Judge Lin said that approach would not amount to a “blank check to punish and retaliate against government critics.”

According to the court file, the department unlawfully instructed firms that do business with the U.S. military to boycott Anthropic. The Pentagon had designated the company as a supply chain risk in February. Under the source text, the designation is normally used for companies in countries that pose a threat to the U.S., and it was applied publicly to an American company for the first time.

Anthropic, the developer of the Claude AI model, argued in its lawsuit that Defense Secretary Pete Hegseth had overstepped his authority with the new designation. The company said its models were not reliable enough to be used safely in weapons systems, and that use for domestic surveillance would also violate rights. Anthropic also said the government’s actions hurt its business and infringed its freedom of expression.

Judge Lin had previously said at an earlier stage that the government appeared to be trying to weaken the company and suppress public debate over the military use of AI. Against that backdrop, the latest ruling drew attention to how official classifications can affect business relationships for technology companies in the defense supply chain.

Anthropic welcomed the decision. A company spokesperson said it was focused on working productively with the government to ensure AI is used in national security in ways that benefit all Americans. The Pentagon had previously argued that private companies should not be able to limit military activity, while the White House had also sharply criticized the company. The Pentagon and the White House did not respond to BBC requests for comment.