Anthropic, the AI firm behind Claude, recently won a preliminary injunction against the United States Department of Defense (DoD), but the company’s legal battle may be far from over. Legal experts and lobbyists warn that the ruling from a California federal judge may be a “premature” victory, as the Pentagon’s supply chain risk designation still partly remains in place, leaving the AI firm vulnerable.
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Trade NVDA with leverageAnthropic Gains Early Legal Win
Judge Rita Lin ruled on March 26 that the Pentagon wrongly labeled Anthropic a supply chain risk under 10 USC 3252. This designation blocks the company’s Claude AI from many government deals because Anthropic refused to lift safety restrictions that limit military uses, such as fully autonomous weapons.
In her ruling, Judge Lin noted that three contractors either terminated their work with Anthropic or were instructed to do so by the government, causing three deals valued at over $180 million to fall apart “despite being on the verge of closing.” However, legal experts emphasize that the decision blocks only one statute and applies solely within California’s federal court jurisdiction.
“Practically speaking, not much has changed regarding Anthropic’s supply chain designation due to this preliminary injunction,” said Charlie Bullock of the Institute for Law and AI. He added that much of the public reaction to the ruling is “premature.” In the immediate aftermath, top Defense Department official Emil Michael insisted that the designation against Anthropic still stands.
Legal Experts Say Anthropic’s Legal Battle Continues as Risk Label Persists
The Pentagon’s supply chain risk designation, typically reserved for foreign adversaries like Chinese firms, was issued under two separate legal authorities. The second statute, 41 USC 4713, falls under the United States Court of Appeals for the District of Columbia Circuit, meaning the risk label remains enforceable until that court rules.
Bullock explained that Anthropic will not be safe until a three-judge panel of the D.C. Circuit rules on 41 USC 4713. Interestingly, two of those judges, Gregory Katsas and Neomi Rao, were appointed by President Trump and have taken broad views on the government’s national security powers.
“I think it’s very possible they will rule differently than Judge Lin did in California’s Northern District,” Bullock said. “It’s likely, in fact, that they will rule differently.”
An Anthropic spokesperson declined to comment on the company’s chances before the D.C. Circuit, while a DoD spokesperson referred to earlier remarks by Emil Michael on X. For the broader tech sector, lawyers and lobbyists say the uncertainty stretches beyond Anthropic.
“As long as the cases and appeals are pending, businesses will not have 100 percent clarity regarding the impact of the Pentagon’s use of supply chain designations,” a senior tech trade association official reported anonymously. If the D.C. Circuit does not block the designation, Anthropic could face months or years of revenue losses while litigation drags on.
What is the Best Defense Stock to Buy?
Anthropic remains a private company ahead of its potential initial public offering (IPO) this year. However, investors interested in AI and defense stocks can consider top players such as Nvidia (NVDA), Lockheed Martin (LMT), Meta Platforms (META), RTX (RTX), and Kratos Defense (KTOS) tracked by the TipRanks Stocks Comparison Tool.
