Minnesota’s ban on AI-generated fake nude images was in force for two months before a federal appeals court put it on hold. On October 2, the St. Louis-based Eighth U.S. Circuit Court of Appeals granted xAI, Elon Musk’s artificial-intelligence company, an injunction that suspends the law while the company’s free-speech challenge moves forward, according to Reuters.
The law, known as HF 1606, was the first of its kind in the country. Passed near-unanimously by the Minnesota legislature and signed by the governor on May 7, it took effect on August 1. It bars website operators, software developers and others from letting users generate realistic images of a person’s intimate body parts from photos in which those parts were never shown, a practice the law calls nudification.
The statute carried teeth. Providers could face civil penalties of up to $500,000 per violation, a figure designed to make platforms police their own tools rather than chase individual users after an image has already spread.
xAI sued the state in July, days before the law took effect, naming Minnesota Attorney General Keith Ellison as the defendant. The company argued the statute is an overbroad, content-based restriction on speech, and that it sweeps up lawful or consensual creations along with the harms legislators meant to stop. The law, xAI said, chills the tools of visual expression rather than narrowly targeting bad actors.
Two courts had already turned the company away. U.S. District Judge Donovan Frank denied a temporary restraining order on July 31, one day before the law went into effect, and rejected a preliminary injunction on September 4. The judge said xAI had waited too long to seek emergency relief and had not shown it would suffer irreparable harm while the case was argued. He also said the balance of harms tipped steeply toward the state, which passed the measure to protect people from images that “rob the target of their dignity.”
The case drew an unusual ally on the federal side. In August, the U.S. Department of Justice filed a statement of interest that sided with xAI’s core argument, saying the statute sweeps more broadly than federal laws such as the PROTECT Act and the Take It Down Act. The department pointed to the law’s strict-liability design and its penalties as evidence that a patchwork of state regimes could burden American AI companies.
The appeals court saw it differently. Its order pauses enforcement while the appeal runs, which means xAI’s Grok image tools and other platforms no longer face the Minnesota prohibition in the interim. The stay makes Minnesota the first state AI-nudification ban to be halted by a federal appeals court, and it flips a case that had been going against xAI.
The fight sits inside a broader argument about how far states can go to regulate AI-generated imagery. Minnesota’s attorney general’s office said it was disappointed by the stay and will keep defending the law, which it says targets products that generate sexual images that harm and harass people. The state has pointed to what it describes as a staggering amount of child sexual abuse material produced by AI image tools, Grok Imagine among them, as the reason the law was needed.
xAI has pushed back by insisting it already does the work the law demands. The company said its Grok Imagine tool includes rigorous protections against creating nude or sexualized images of real people, and that it has begun suing users who evade those safeguards to generate such content without consent. The company’s position is that it opposes nonconsensual deepfakes and still believes the statute is the wrong instrument, one that restricts lawful expression instead of the misuse it claims to stop.
The case is now a live test of the First Amendment limits on AI content law. Courts have been split on the question. California’s election-deepfake law was blocked on speech grounds, while an earlier Minnesota deepfake statute survived a challenge in 2025, a pattern that suggests outcomes depend heavily on how a particular law is drafted. xAI’s challenge will turn on whether Minnesota’s version is narrow enough to pass constitutional scrutiny, or whether its reach over the providers of image tools is too broad to stand.
What the stay does not do is decide the merits. It is an interim order, not a ruling on whether the law survives. The case will continue on its merits, and a final decision could reach the Supreme Court. In the meantime, the practical effect is immediate: the image tools covered by the law can operate in Minnesota without the threat of six-figure penalties for each violation while the arguments play out.
The outcome matters beyond Minnesota. Nearly every major platform that generates images, from xAI to OpenAI, Google and Meta, is watching a case that will help define where state regulation of AI imagery ends and constitutional protection begins. Minnesota drew a line and moved fast. The Eighth Circuit has now told it to slow down until the courts decide whether the line was drawn in the right place.
