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A federal court last week dismissed a child pornography possession charge against a man who used AI to create computer-generated, sexual images of children.
The ruling revealed decades-old Supreme Court precedent affording virtual child pornography some protection under the First Amendment.
A three-judge panel for the U.S. Court of Appeals for the 7th Circuit on August 25 unanimously upheld a lower court ruling dismissing the child porn possession charge against 44-year-old Steven Anderegg.
A grand jury charged Anderegg with producing, possessing and distributing child pornography in 2024 after the Department of Justice found he used AI to create thousands of images of realistic, virtual child sexual abuse material (CSAM).
Despite the seemingly overwhelming evidence against Anderegg, two federal courts — the U.S. District Court for the Western District of Wisconsin in 2025 and now the Seventh Circuit — agreed to dismiss the possession charge against him.
Judge John Z. Lee explained he had no choice but to follow Supreme Court precedent, no matter how outdated. In a separate concurrence asking the Supreme Court to provide updated guidance on the issue, he wrote:
Free Speech Coalition (FSC) here refers to Ashcroft vs. Free Speech Coalition, one of two Supreme Court rulings which informed the Seventh Circuit’s decision in Anderegg’s case.
In FSC, the Court struck down the federal Child Pornography Prevention Act of 1996, which had extended laws against child pornography to include “any visual depiction, including any photograph, film, video, picture or computer or computer-generated image or picture that is or appears to be [child pornography].”
The ruling in FSC differentiates between CSAM created using direct child victims and virtual CSAM, which is created without direct child victims. Years earlier, in 1982, the Court ruled the First Amendment does not protect CSAM created with children.
But in FSC, the justices determined virtual CSAM, unlike CSAM created with children, “creates no victims by its production” and is not “‘intrinsically related’ to the sexual abuse of children.” They decided virtual CSAM only falls outside First Amendment protections if it meets the standard for obscene content, which is defined as content:
- “Without serious literary, artistic, political or scientific value.”
- “Appealing to the prurient interest in the view of an average person according to community standards.”
- “Describing sexual conduct or excretory functions in an offensive way.”
Simply put, FSC confers more First Amendment protections on virtual CSAM than CSAM made with children. Importantly, images of real children altered to be pornographic count as CSAM made with children, not virtual CSAM.
The second Supreme Court case cited by the Seventh Circuit is Stanley v. Georgia, in which the Court determined a U.S. citizen could lawfully possess obscene material in the privacy of their own home.
“We hold the First and Fourteenth Amendments prohibit making mere private possession of obscene material a crime,” the justices wrote.
“As we have said, the State retains broad power to regulate obscenity; that power simply does not extend to mere possession by the individual in the privacy of his own home.”
The Seventh Circuit determined FSC and Stanley prevent the federal government from prosecuting Anderegg’s possession of virtual CSAM in his home.
The Seventh Circuit’s ruling is undeniably unnerving — but it’s also fairly narrow.
It isn’t a get-out-of-jail-free card. Anderegg still faces charges for production and distribution of child pornography. He is also charged with giving obscene material to a minor under 16-years-old.
It also doesn’t prevent the DOJ and other law enforcement agencies from prosecuting people who possess virtual CSAM. As Randi Pfefferkorn, policy fellow at the Stanford Institute for Human-Centered AI, tells The Washington Post, it’s impossible to “possess” CSAM without first obtaining it.
“If all you can do is privately possess something, well, how do you come into possession of it?” She explains. “Either you produce it or you receive it from somewhere.”
The Seventh Circuit’s ruling does, however, exposes the flawed premise underlying American law — that the creation and private possession of virtual CSAM is a victimless crime.
“We know that AI models are trained with real children, and there have been reports that some models have even been trained with CSAM depicting real children being abused,” Dani Pinter, chief legal officer and director of the law center at the National Center on Sexual Exploitation, wrote in a press release.
“AI-generated CSAM can be used as a grooming tool by predators, and the National Center for Missing and Exploited children reports that children and their families have been sextorted through predators using AI-generated CSAM,” she continues.
That’s not to mention the possibility that increased availability of virtual CSAM may increase desire for CSAM made with direct child victims.
The massive increase in AI-generated and -manipulated CSAM is just one of the cultural effects of widespread AI use. To learn more about AI, and how to protect your children in the digital age, read the articles below.
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