Judge Denies xAI Bid to Pause Minnesota Nudify Law; $500,000 Penalty Exposure Stands

X.AI LLC lost its bid to pause Minnesota’s restrictions on AI nudification, leaving the law in effect and exposing covered violations to civil penalties of up to $500,000 each.

U.S. District Judge Donovan W. Frank denied xAI’s request for a preliminary injunction on Sept. 4, finding the company failed to show the irreparable harm required for emergency relief. The decision came after Frank rejected xAI’s request for a temporary restraining order on July 31.

The ruling did not impose a $500,000 fine on xAI. It left the statutory penalty exposure in place while xAI’s broader challenge to the law continues.

Frank also said the constitutional questions raised by the case are “complex” and “deserve, and will receive, full consideration.” xAI filed a notice of appeal to the U.S. Court of Appeals for the Eighth Circuit the same day.

Three-Day Delay Weighed Against xAI

The timing of xAI’s challenge was central to Frank’s finding that the company had not established an emergency.

Gov. Tim Walz signed H.F. 1606 on May 7, with the law taking effect Aug. 1. xAI filed its complaint on July 27 and its emergency motion on July 29, three days before the law took effect.

Frank found that xAI had not adequately explained why it waited until shortly before the effective date to seek relief. That delay weakened the company’s claim that the law presented an immediate threat that could not be remedied later.

The judge also considered measures xAI had already taken to restrict Grok Imagine’s image-editing functions for Minnesota users. Frank found that xAI had not adequately established that future compliance costs would amount to irreparable harm.

xAI said complying with the law required geographic controls and engineering work and could result in lost Minnesota users and business. Frank described the company’s evidence of engineering costs as “vague and conclusory” and found the projected user and business losses speculative.

$500,000 Penalty Exposure Remains

The financial stakes were another part of xAI’s argument for an injunction.

Minnesota’s law allows civil penalties of up to $500,000 for each unlawful access, download, or use of a covered service to “nudify” an image or video. The law applies to people who own or control websites, applications, software, programs or other services and is now codified as Minn. Stat. § 325E.91.

Frank treated that potential liability as monetary harm rather than an irreparable injury. The order reasoned that monetary penalties could be recovered if the statute were ultimately invalidated, weakening xAI’s case for extraordinary preliminary relief.

xAI Appeals To The Eighth Circuit

xAI has argued that H.F. 1606 is an unconstitutional, content-based restriction that reaches protected expression beyond the conduct Minnesota says it seeks to prevent.

The company has also said it already prohibits users from generating nude or sexualized images of people without their consent. Those are xAI’s stated policies and legal arguments, not findings that the court adopted.

Frank did not resolve those constitutional claims in the Sept. 4 order. Instead, he found that xAI had not met the threshold for preliminary relief and that the balance of harms and public interest favored Minnesota.

Minnesota has separately moved to dismiss the lawsuit, arguing that xAI lacks standing and has failed to state a claim. That motion remains pending as xAI appeals the injunction ruling.

The Eighth Circuit will now consider xAI’s challenge to Frank’s denial of preliminary relief, while Minnesota’s law remains in force.