xAI Sues Minnesota Over Landmark AI Nudification Ban

Elon Musk’s artificial intelligence company xAI has filed a federal lawsuit challenging Minnesota’s first-in-the-nation law banning “nudification” technology — AI tools that can digitally remove clothing from images — arguing the statute violates the First Amendment and is unconstitutionally overbroad. The complaint was filed July 27 in the U.S. District Court for the District of Minnesota against state Attorney General Keith Ellison, days before the law is set to take effect on August 1.

According to AP News, the 38-page lawsuit does not contest Minnesota’s interest in prohibiting non-consensual deepfake pornography. However, xAI argues that House File 1606 “extends far beyond that goal,” banning many constitutionally protected images and videos while exposing the company to penalties of $500,000 per violation with no safe harbor for good-faith compliance efforts.

A Law With No Exceptions

HF 1606, signed by Gov. Tim Walz in May after passing the Minnesota Senate 65-0, makes it illegal for website and app owners to allow users to access or use services that “nudify” images. The law defines nudification as altering or generating an image to depict “an intimate part not depicted in an original unaltered image,” borrowing its definition of intimate parts from Minnesota’s criminal sexual conduct code — covering the primary genital area, groin, inner thigh, buttocks, or breast.

The official bill text reveals that the law contains no knowledge requirement, no intent requirement, and no safe harbor provision. Liability attaches the moment a user succeeds in creating a prohibited image, regardless of what technical safeguards the provider has implemented. The only exemption applies when the tool “requires the technical skill of a user” — effectively carving out professional editing software like Adobe Photoshop while targeting consumer-grade AI tools accessible to anyone.

The law is also deliberately silent on consent. During a Senate Judiciary Committee hearing in February, bill sponsor Sen. Erin Maye Quade confirmed that the prohibition covers images created with consent, responding “that is intentional” when a staffer noted the absence of a consent exception.

The Constitutional Challenge

xAI’s lawsuit argues that HF 1606 constitutes a content-based ban on speech, which triggers the strictest level of judicial scrutiny under the First Amendment. The complaint contends that the law’s definition of “intimate part” is overbroad, covering body parts routinely exposed in public — including a man’s bare chest or thighs visible in shorts — meaning a satirical or artistic image could trigger massive liability.

As CBS Minnesota reported, the company argues it has already implemented technological measures to prevent misuse, including content filters, account suspensions, and geographic blocking for regions where nudification is illegal. Under HF 1606, however, a single user bypassing these protections could result in penalties of $500,000 per violation.

The lawsuit specifically highlights that Grok’s terms of service prohibit using the tool for illegal, harmful, or abusive activities, and that the company enforces these rules through account suspensions and terminations. After a global backlash in early 2026 over sexualized images, Grok announced geo-blocking measures and technological safeguards to prevent editing of revealing clothing images.

Walz responded to the lawsuit on social media, posting: “See you in court, creep.” Ellison, whose office is named as defendant, said in a statement: “I know that using AI to generate nude images of people against their will is appalling. There are plenty of worthy debates to have about AI policy. This is not one of them.”

A Critical Test for State AI Regulation

The case arrives amid an intensifying conflict between state and federal approaches to AI governance. The Trump administration has signaled it will challenge state-level AI laws, favoring a comprehensive national legislative framework and warning that conflicting state regulations would undermine American innovation and global AI leadership.

Minnesota’s approach is distinct from other states’ efforts. California’s election deepfake law was blocked in court over First Amendment concerns. Texas took a different path, imposing liability on website owners who know about non-consensual nudification and fail to take it down promptly. By targeting the toolmaker with strict liability and per-image penalties, HF 1606 represents the most aggressive state-level AI regulation enacted to date.

Legal analysts at Reclaim The Net note that the law’s definition of “intimate part” is its most significant vulnerability. The criminal code definition was written to determine when unwanted touching becomes criminal assault — a context where it makes sense. Transplanted into a law about images, however, it inadvertently regulates depictions that most people would not consider nudification at all.

The law also creates an unusual carve-out favoring professional creators. Because the exemption applies only when the tool requires “technical skill,” the identical image is lawful when produced by someone with training but unlawful when generated by an ordinary user. Critics argue this classification raises its own First Amendment concerns by favoring one class of creators over another.

What to Watch For

xAI is seeking a preliminary injunction to block enforcement before the law takes effect on August 1. If granted, the injunction would halt penalties while the court considers the constitutional questions, a process that could take months or years.

The outcome carries national significance. If HF 1606 survives judicial scrutiny, it could become a template for other states seeking to regulate AI tools at the source. If struck down, it may reinforce the argument that meaningful AI regulation requires federal action rather than a patchwork of state laws. With the law’s effective date looming, the federal district court in Minnesota now holds the pen on the nation’s most consequential test of state-level AI regulation.