A federal appeals court ruled Tuesday that the First Amendment protects an individual's right to privately possess AI-generated images of child sexual abuse - as long as the material does not depict a real person and stays within the home.
The decision from the U.S. Court of Appeals for the 7th Circuit tests the limits of laws written before generative AI made it easy to create realistic fake images of children. Judge John Lee, writing for the court, upheld a lower court's dismissal of a possession charge against Steven Anderegg of Holmen, Wisconsin, while urging the Supreme Court to revisit the issue.
"Given the relentless advancement in artificial intelligence models, we have some concerns about the lines these cases draw, but we are not free to redraw them ourselves," Lee wrote.
The case and the charges
The Justice Department charged Anderegg in 2024 with using a popular AI image generator to create thousands of explicit images of children. Prosecutors accused him of producing, distributing, and possessing obscene visual depictions of minors engaged in sexually explicit conduct.
Anderegg moved to dismiss the possession and production charges on First Amendment grounds. A judge in the Western District of Wisconsin dismissed the possession charge last year, prompting the government's appeal.
Lee's ruling cited two Supreme Court precedents. A 1969 decision held that individuals have a right to possess obscenity in the privacy of their home. A 2002 decision found that "virtual" child sexual abuse material not depicting a real person is not child pornography.
The charges against Anderegg for producing and distributing AI-created abuse material remain pending. He also faces a criminal charge for allegedly transferring similar sexual images to a 15-year-old boy via Instagram.
The limits of the ruling
The decision does not protect acts like downloading images from a third-party site or taking a laptop or phone storing the images outside the home, said Riana Pfefferkorn, a policy fellow at the Stanford Institute for Human-Centered AI.
Pfefferkorn said the ruling won't stop federal prosecution of people creating virtual abuse material. "If all you can do is privately possess something, well, how do you come into possession of it? Either you produce it, or you receive it from somewhere," she said.
The court also noted an existing Supreme Court exception for "morphing" images - cases where innocuous photos of real children are edited into sexual poses. That material is considered child pornography because it harms real children.
Eric Goldman, a law professor at Santa Clara University School of Law, said the decision is "a reminder to the world that virtual CSAM may be different than actual CSAM. It might be regulated differently or protected by the Constitution differently."
What happens next
Daniel Lyons, a law professor at Boston College, said there is a decent chance the Supreme Court will take up the case. Last year, the court revisited early-internet-era speech and pornography decisions in the course of upholding Texas's right to require pornography websites to verify a user's age before granting access.
Lyons said tightening restrictions on AI-generated child sex abuse material is necessary because the growing number of synthetic images is straining a system originally created to combat explicit imagery of real children. Online platforms have for decades relied on a reporting pipeline run by the nonprofit National Center for Missing and Exploited Children, which allows companies to automatically compare suspected abuse material against the center's database of known violating content, known as hashes.
The nonprofit recently told Congress it is being overwhelmed by the deluge of reports from tech companies of suspected AI-generated abuse material, and that those reports often leave out basic information law enforcement needs to investigate.
Law enforcement learned about Anderegg's activity through a "CyberTip" to NCMEC from Meta, which owns Instagram, after he allegedly sent images via direct message. Anderegg made the images using an AI model released by Stable Diffusion, an open source developer. A spokesperson for Stability AI said the company "is committed to preventing the misuse of AI technology, particularly in the creation and dissemination of harmful content, including CSAM."
Why this matters for legal professionals
This ruling creates a narrow but significant gap in federal enforcement: possession of purely synthetic abuse material at home is now constitutionally protected in the 7th Circuit, while production, distribution, and receipt remain prosecutable. Legal teams advising tech companies, platforms, and clients on content moderation and criminal exposure should track whether the Supreme Court grants certiorari, and should note that the practical window of protection is small - most possession cases involve evidence of production or transfer that prosecutors can still pursue.
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