Judge appears skeptical of Pentagon arguments in legal fight over Anthropic dispute

Lawyers representing the Department of Defense and Anthropic appeared in a San Francisco courtroom Tuesday afternoon for the first major hearing in the artificial intelligence company's legal challenge to its recent designation as a "supply chain risk" by the Pentagon. During the proceedings, U.S. District Judge Rita Lin appeared skeptical that the Department of Defense took appropriate action when it designated Anthropic a supply chain risk, suggesting the move was an act of retaliation to punish the company for opposing the Trump administration in contract negotiations over the use of its AI technology. "

What is troubling to me about these reactions is that they don't really seem to be tailored to the stated national security concern," she said. "

If the worry is about the integrity of the operational chain of command, [the Department of War] could just stop using Claude. It looks like defendants went further than that because they were trying to punish Anthropic." Claude is Anthropic's AI chatbot.

The judge concluded the hearing without issuing a ruling, instead vowing to decide the motion for a preliminary injunction within the next few days. During the hearing, Lin suggested that the attempt to bar Anthropic from any government work went beyond what was necessary to remedy the national security concern raised by Secretary of Defense Pete Hegseth, saying, "it looks like an attempt to cripple Anthropic and, specifically, my concern is whether Anthropic is being punished for criticizing the government's contracting position in the press." Lin acknowledged that Hegseth has the authority to limit Anthropic's national security applications, but said the question before her was whether the Pentagon went too far by designating the company as a supply chain risk.

Lawyers for the Trump administration attempted to argue that Anthropic poses a national security risk due to concerns it might try to "sabotage" the military through a future software update. "

Anthropic is not just acting stubbornly. It's not just refusing to agree to contracting terms; instead, it's raising concerns to DOW about how DOW uses its technology in military missions that are even within the scope of the usage terms," said Deputy Assistant Attorney General Eric Hamilton. The judge appeared skeptical of that argument, calling it "a pretty low bar" to ban a company from government work. ”

It's enough if an IT vendor is stubborn and insists on certain contracting terms, and it asks annoying questions, then it can be designated as a supply chain risk because they might not be trustworthy?" " she said. When pressed about how the company could sabotage the military, Hamilton suggested that Anthropic could attempt to update its software with a "kill switch" if it disagrees with how the chatbot tool Claude is being used. He could not definitively say whether Anthropic even has the power to push such an update. ”

The worry is that Anthropic will, instead of merely raising concerns and pushing back, it will decide we have a problem with what DOW is doing, and we are going to manipulate the software in a way so that we can control how DOW is using it," he said.

In one notable moment, Hamilton appeared to openly contradict Hegseth's statement in a social media post last month that as a result of the dispute, "no contractor, supplier, or partner that does business with the United States military may conduct any commercial activity with Anthropic."

“I'm not aware of any authorities that would permit DOW to categorically bar contractors from using a company's products or services for non-DOW work," he said. Lin pressed Hamilton to explain why Hegseth would make such a claim if he didn't mean it.

"I don't know," Hamilton said.

"I know that this administration is committed to transparency, and it indicated in this post it would be taking action following the post to designate the company as a supply chain risk, which is what it did." Michael Mongan, an attorney for Anthropic, pushed back, saying that the DOD's argument "continues to shift" and is trying to punish the company after ongoing contract negotiations failed.

“I think that the reality is that this is a supply chain designation in search of a justification or a rationale and that is a problem, under the Administrative Procedure Act," he said.

He concluded the hearing by urging the judge to quickly issue a preliminary injunction to nullify the Pentagon's actions. "

These actions are unlawful for the reasons that we've discussed. They have caused immediate, irreparable and ongoing harm to Anthropic, to its constitutional rights, to its reputation in the eyes of partners, customers and investors and to its business interests, not just in the national security sector," said Mongan, the Anthropic attorney.