A federal judge in California ruled on Thursday evening that the Trump administration’s designation of Anthropic as a supply chain risk was illegal. U.S. District Judge Rita Lin said Defense Secretary Pete Hegseth’s labeling of Anthropic as a national security risk constituted “unlawful retaliation” in violation of the First Amendment, and called the decision “arbitrary and capricious.” Lin also found Anthropic was denied due process under the Fifth Amendment.

The dispute arose after Hegseth and President Trump labeled Anthropic a supply-chain risk earlier this year, ordering all federal agencies, including those outside defense, to stop working with the Claude maker. The labeling stemmed from Anthropic setting firm safety guardrails that would prevent the Pentagon from using its models for fully autonomous weapons and mass surveillance of American citizens. The Pentagon denied any intention to use Anthropic models for unlawful purposes and alleged Anthropic could try to control the military’s use of the models it purchased.

In her ruling, Lin noted the government’s “words and deeds confirm that the challenged actions were based on a desire to make a public example out of Anthropic for its ‘arrogance’ in criticizing the government.” She highlighted inconsistencies between the supply chain label and other government actions, such as Hegseth’s proposal to apply the Defense Production Act to Anthropic, which would imply the company is essential to national security rather than a threat. Lin also pointed to the Department of Defense continuing to pursue a contract with Anthropic and collaborating on the company’s new model, Mythos, for cybersecurity. She stated that Anthropic “undisputedly lacks” any backdoor access to its technology once it is handed over to the DOD.

Lin concluded that although the Department of Defense is free to choose its AI vendors, the broad measures imposed on Anthropic were illegal and baseless. She wrote, “The empty invocation of national security is not a blank check to punish and retaliate against government critics.”

An Anthropic spokesperson welcomed the ruling, stating, “We remain focused on working productively with the government to harness AI for our national security so all Americans benefit from this technology.” Anthropic filed two complaints against the DOD in March, one in California and one in Washington, D.C. The D.C. suit is still ongoing. TechCrunch has reached out to the DOD for comment.