Federal Appeals Court Blocks Charge Over Private Possession of AI-Generated Child Sexual Abuse Images

A federal appeals court has upheld the dismissal of a charge against Wisconsin resident Steven Anderegg for privately possessing obscene AI-generated sexual images depicting fictional children in his home, finding that existing Supreme Court precedent protects that narrow form of possession under the First Amendment. Separate federal charges accusing him of producing, distributing and sending the material to a minor remain pending.

The U.S. Court of Appeals for the Seventh Circuit issued its ruling August 25, nearly two years after authorities began investigating Anderegg. The three-judge panel said Supreme Court decisions governing obscenity, privacy in the home and virtual sexual images required dismissal of the possession charge, even as two judges questioned how well those older rulings account for today's increasingly realistic AI technology.

Federal prosecutors allege Anderegg used Stable Diffusion, a generative AI program, to create hundreds of sexually explicit images depicting prepubescent children. The investigation began after Meta reported suspected child sexual abuse material sent through Instagram to the National Center for Missing and Exploited Children in October 2023. Authorities later linked the account to Anderegg and searched his home and electronic devices.

Anderegg was charged under a federal obscenity law, 18 U.S.C. Section 1466A, that covers drawings, digital pictures and computer-generated images depicting minors engaged in sexually explicit conduct. Courts do not consider all sexually explicit material legally obscene. Under a three-part Supreme Court test, material generally must appeal to prurient sexual interests under community standards, depict sexual conduct in a clearly offensive way and, taken as a whole, lack serious literary, artistic, political or scientific value.

Congress specifically wrote Section 1466A so prosecutors do not have to prove that the depicted child actually exists. Federal authorities acknowledged, however, that the images underlying Anderegg's charges do not depict or identify any real child. That distinction determines which line of First Amendment cases applies.

The Supreme Court ruled in Stanley v. Georgia in 1969 that the government generally cannot punish someone merely for possessing obscene material in the privacy of a home. The rule is narrow. It does not create a constitutional right to produce, sell, distribute, or transport obscene material.

The justices later allowed a different rule for child sexual abuse material involving real children. Decisions including New York v. Ferber and Osborne v. Ohio recognized that actual children are harmed when the material is made and can continue to be harmed when images of their abuse circulate. Protecting those victims allows the government to criminalize possession of such material, including inside a person's home.

Virtual images created without real children presented a different constitutional question. In Ashcroft v. Free Speech Coalition in 2002, the Supreme Court struck down portions of a federal law that broadly prohibited sexually explicit depictions of fictional minors. Because no actual child was used to create the images, the court found that the government could not automatically treat them the same as material documenting real abuse.

Congress responded with the PROTECT Act in 2003, which included the obscenity provision now being used against Anderegg and expressly extended it to computer-generated images. The Seventh Circuit did not strike down that law. Instead, it ruled that the possession provision could not constitutionally be applied to Anderegg under the circumstances alleged. Known as an "as applied" ruling, that means the law remains in force but cannot be used to punish the specific conduct before the court.

Prosecutors argued that advances in generative AI have changed the problem the Supreme Court considered more than two decades ago. Synthetic images can now look so realistic that investigators may have difficulty determining whether a real child has been abused, the government argued, potentially diverting resources from efforts to identify actual victims. Prosecutors also raised concerns that such images could be used to groom minors.

The appeals court acknowledged that technological change has complicated the legal line between images involving real victims and entirely synthetic material. Judge John Z. Lee, joined by Judge Michael Kolar, said today's AI systems can produce images that are extremely difficult to distinguish from depictions involving actual children and called for additional Supreme Court guidance. Lower federal courts, however, must continue following existing Supreme Court precedent unless the justices change it.

The Seventh Circuit affirmed the dismissal of Anderegg's possession charge. His federal charges alleging production, distribution, and transfer of obscene material to a minor remain pending in the U.S. District Court for the Western District of Wisconsin.