Citing “attempted corporate murder,” Judge calls on Anthropic and Department of War to resolve supply chain risk dispute

(SeaPRwire) –   Legal representatives for the Department of War and Anthropic engaged in a contentious session in a California federal court on Tuesday. The dispute centered on Anthropic’s challenge to the Pentagon’s classification of the company as a national security supply-chain risk and its subsequent prohibition on all government contractors from utilizing Anthropic’s extensive AI tools.

This case, which marks a historic first as the Pentagon (now known as the Department of War, or DOW) has labeled a U.S.-led business a supply-chain risk to national security, originated from a swiftly escalating contract negotiation. The DOW sought to incorporate a broad “all lawful use” clause into its agreements with the AI firm, intending to allow the military to employ Anthropic’s Claude tool for any legal purpose. Anthropic resisted, expressing reservations about the military’s use of Claude for lethal autonomous warfare and mass surveillance of American citizens. Anthropic, under the leadership of founder Dario Amodei, stated that these applications had not undergone thorough testing and were not deemed safe. The DOW countered that such safeguards were unacceptable, arguing that military commanders require discretion in making mission-related decisions.

On February 27, President Trump posted on Truth Social, instructing “EVERY” federal agency to “IMMEDIATELY CEASE” all use of Anthropic’s tools. On the same day, Secretary of War Pete Hegseth, in a post on X, designated Anthropic a “supply-chain risk,” declaring that “no contractor, supplier, or partner that does business with the United States military may conduct any commercial activity with Anthropic.” This risk label is typically reserved for nation states, foreign adversaries, and other significant threats.

Anthropic subsequently filed a lawsuit on March 9, alleging that the government had “retaliated against it” for expressing its views on safety guardrails, thereby violating the First Amendment. The company also claimed the government had breached the procedures outlined in the Administrative Procedure Act and the Fifth Amendment’s right to due process. The government maintained that its actions were a direct response to Anthropic’s refusal to accept those contractual terms during negotiations and argued that free speech was not a factor in the case. Deputy Assistant Attorney General Eric Hamilton asserted that the government possesses unrestricted authority to determine which companies it chooses to contract with. Hamilton also raised concerns that Anthropic’s conduct suggested future software updates could potentially serve as a “kill switch” in military operations.

District Judge Rita F. Lin expressed skepticism, describing the case in her opening remarks as a “fascinating public policy debate” between Anthropic’s stance and the government’s military requirements. However, she clarified that her role was not to “decide who is right in that debate.”

Instead, Lin stated that the court’s true task was to determine whether the government “violated the law” by going beyond merely ceasing to use Anthropic’s AI services and seeking a more suitable AI vendor.

“After Anthropic went public with this contracting dispute, defendants seemed to have a pretty big reaction to that,” Lin observed.

These reactions included a ban on Anthropic ever securing a government contract—even preventing other entities like the National Endowment for the Arts from using it to design a website; Hegseth’s directive that any entity wishing to do business with the U.S. military must terminate its commercial relationship with Anthropic; and, the designation of Anthropic as a supply-chain risk.

“What is troubling to me about these reactions is that they don’t really seem to be tailored to the stated national security concern,” Lin commented. She suggested that if the concern was related to the chain of command, the DOW could simply stop using Claude and move on.

“One of the amicus briefs used the term attempted corporate murder,” she added. “I don’t know if it’s murder, but 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.”

The amicus, or “friend-of-the-court,” briefs submitted in the case have drawn contributions from various parties, including Microsoft, retired military officers, and engineers and researchers from OpenAI and Google. Nearly all of these briefs support Anthropic’s request for an injunction against the supply-chain risk designation.

The specific brief referenced by Lin originated from investors and the “Freedom Economy Business Association.” This brief cited an X post written by Dean Ball, who previously served as Trump’s senior policy advisor for AI and emerging technology.

Ball’s post stated, “Nvidia, Amazon, Google will have to divest from Anthropic if Hegseth gets his way. This is simply attempted corporate murder. I could not possibly recommend investing in American AI to any investor; I could not possibly recommend starting an AI company in the United States.”

The American Federation of Government Employees, a union representing 800,000 federal workers, asserted in its amicus brief that the Trump administration had a pattern of using national security concerns as a pretext for retaliating against free speech.

Microsoft’s brief indicated that a ban on Anthropic would negatively impact its own business and could deter future defense-industry investment and engagement with AI.

The Human Rights and Technology Justice Organization’s brief did not take a position on who should prevail in court but argued broadly against militarized AI, stating that its use could lead to catastrophic human rights risks.

Lin announced that she would issue her opinion later this week.