A federal judge has ruled in favor of artificial intelligence company Anthropic in its legal battle against the Pentagon after the government labeled the company as a supply chain risk earlier this year.

U.S. District Judge Rita Lin issued a written order Thursday night that the Pentagon acted illegally by punishing the AI company for its criticism of the Department of Defense’s views on AI use. The government is expected to fight the ruling.

The dispute between the AI company and the government broke out in February when President Donald Trump and Defense Secretary Pete Hegseth accused Anthropic of endangering national security and designated the company a supply chain risk. Anthropic CEO Dario Amodei refused to back down over concerns the company’s products could be used for mass surveillance or autonomous armed drones.

Lin wrote that the government’s actions “were based on a desire to make a public example out of Anthropic for its ‘arrogance’ in criticizing the government, not based on any articulable basis to believe that Anthropic would actually sabotage its model.”

An Anthropic spokesperson said in a statement that they welcome the judge’s ruling: “We remain focused on working productively with the government to harness AI for our national security so all Americans benefit from this technology.”

The White House did not immediately respond to a request for comment.

In the 59-page ruling, Lin, an appointee of former President Joe Biden, wrote that neither the Constitution nor the federal statute the government invoked allows them to “impose sweeping penalties based principally on Anthropic’s critique of the Administration’s views.”

Anthropic sued the Pentagon over the supply chain risk designation in March for what it called an “unlawful campaign of retaliation” over its refusal to allow unrestricted military use of its technology.

The legal challenge intensified an unusually public dispute over how AI can be used in warfare and mass surveillance. Anthropic’s primary tech industry rival, ChatGPT maker OpenAI, made its own deal to work with the Pentagon just hours after the government punished Anthropic for its stance.

Anthropic and OpenAI are each ramping up for buzzy initial public offerings.

Anthropic has also filed a separate and narrower case that is still pending in the federal appeals court in Washington, D.C. That case involves a different rule the Pentagon is using to try to declare Anthropic a supply chain risk.

Earlier in the legal proceedings, Lin had temporarily blocked the Pentagon from labeling the company as a supply chain risk and blocked enforcement of Trump’s social media directive ordering all federal agencies to stop using Anthropic and its chatbot Claude.

In a hearing July 30, Lin had said that the government’s position was “really troubling” to her and that it seemed “at odds to me with the First Amendment.” She also said she believed the record had “gotten worse for the government” over time.

In that same hearing, Department of Justice lawyers argued that the nature of AI models is “so staggeringly enormous and opaque” that the Defense Department cannot evaluate it in the same way it would a physical piece of hardware.

Anthropic lawyer Michael Mongan said in that hearing that the government’s actions “profoundly harm Anthropic” and that they “threaten more broadly to chill speech and debate on a very important issue.”

Anthropic has also filed a separate and narrower case that is still pending in the federal appeals court in Washington, D.C. That case involves a different rule the Pentagon is using to try to declare Anthropic a supply chain risk.

Kaitlyn Huamani, The Associated Press