Musk's xAI Fails to Block Minnesota's AI 'Nudification' Law - Bloomberg Law

Minnesota can enforce its ban on companies allowing users to alter images to depict “intimate parts” while a constitutional challenge from Elon Musk’s X.AI LLC proceeds. xAI, which allows users to create sexual images through its Grok Imagine tool, failed to show irreparable harm warranting a preliminary injunction, Judge Donovan W. Frank of the US District Court for the District of Minnesota said . The state law, which went into effect Aug. 1, prohibits companies that own AI tools from allowing users to generate certain sexual images. The statute allows the attorney general to seek civil penalties of up to $500,000 for each violation, in addition to injunctive relief and other remedies. xAI alleged in a July 27 lawsuit that the law violates the First Amendment, and exposes a wide array of protected speech to liability. The company says its policies bar users from engaging in any illegal or harmful activities, including the nudification of a real person’s image or creating content that sexualizes or exploits children. But xAI is facing several lawsuits alleging images of children were used to create child pornography through Grok Imagine . xAI waited nearly three months after the statute was signed into law in May, and sought preliminary injunctive relief three days before the law went into effect, Frank said. There’s no dispute that xAI “is a sophisticated and well-resourced litigant with the means to move quickly when its interests are at stake.” If xAI had a genuine fear of irreparable harm, it would have acted more quickly, the judge said. Although xAI pointed to the potential monetary penalties, those financial harms don’t constitute irreparable harm because they could be recouped if the law is eventually invalidated. And xAI’s asserted commercial injuries—such as how the increased rate of moderation in Minnesota due to the law could result in a loss of users—don’t demonstrate a threat of irreparable harm either, Frank said. The company has already made adjustments to its AI tools and didn’t provide evidence that there will be any future cost. xAI’s evidence to support claims that it’s expending substantial resources is also “vague and conclusory,” Frank said. The balance of harms and public interest “tips steeply in favor of the State,” the judge said. Minnesota has enacted a law to protect the public from the “undisputed harm stemming from AI-nudification technology” and proliferation of those images, Frank said. Stinson LLP and Eimer Stahl LLP represent xAI. The case is X.AI LLC v. Ellison , D. Minn., No. 0:26-cv-03425, 9/4/26. Learn more about Bloomberg Law or Log In to keep reading: See Breaking News in Context Bloomberg Law provides trusted coverage of current events enhanced with legal analysis. Learn more Already a subscriber? Log in to keep reading or access research tools and resources. Log In