A federal judge has declined to temporarily block Minnesota’s new AI deepfake law targeting tools that can create realistic, nonconsensual nude images, allowing the first-of-its-kind restriction to take effect while xAI’s broader legal challenge moves forward.

The judge left open the possibility of revisiting the issue later, scheduling an Aug. 19 hearing to consider xAI’s request for a preliminary injunction. xAI filed its lawsuit Monday, arguing the Minnesota law violates First Amendment protections and places unconstitutional limits on AI-generated content.

The law, signed in May by Minnesota Gov. Tim Walz, targets websites, applications and software platforms that allow users to create realistic "nudified" images of real people without consent. It also prohibits advertising tools that enable such content.

The statute defines a nudified image as one that has been digitally altered or generated to depict an intimate body part that was not present in the original image and appears realistic enough that a reasonable person would believe it belongs to the identifiable individual.

Violations carry significant financial penalties. The law allows civil penalties of up to $500,000 per unlawful access, download or use, along with additional damages and legal fees.