Appeals court: First Amendment shields private possession of AI-generated child abuse material, other charges stand

A federal appeals court has upheld the dismissal of a single charge against a Wisconsin man accused of using artificial intelligence to generate child sexual abuse material, ruling that private, in-home possession of such images is protected by the First Amendment when no real-life child is depicted. Three other charges against him remain pending.

The 7th U.S. Circuit Court of Appeals affirmed the ruling Aug. 25 in the case of Steven Anderegg, arrested in 2024 after Meta reported he had sent AI-generated images to a minor's Instagram account. Prosecutors say Anderegg used the program Stable Diffusion to create hundreds of sexually explicit images of children and was separately charged with producing, distributing and transferring the material to a boy under 16. A district court had already dismissed the possession count on constitutional grounds, and the government appealed that single dismissal.

Writing for the panel, Judge John Z. Lee said the court was bound by two Supreme Court precedents. Stanley v. Georgia, a 1969 ruling protecting private possession of obscene material in one's home, and Ashcroft v. Free Speech Coalition, a 2002 decision holding that sexually explicit ages not depicting real children don't qualify for narrower exceptions the court has carved out to protect actual child victims. Because Anderegg's case involves no real child, Lee wrote, those exceptions don't apply, and Stanley's privacy protection guides the ruling instead.

The ruling affects only the possession charge. Anderegg still faces prosecution for producing and distributing the images and for transferring them to a minor.

Lee didn't hide his discomfort with the outcome, expressing that concerns remain about the extent of the previous rulings as generative AI technology continues to evolve.  

“We now live in an age where GenAI models can render images depicting the abuse of virtual children that are virtually indistinguishable from those depicting the abuse of actual children,” he wrote. “This case illuminates how this evolving technology complicates the lines drawn by the Supreme Court in Stanley, Osborne, and Free Speech Coalition. Indeed, in Free Speech Coalition, the Supreme Court addressed the scope of First Amendment protections for virtual CSAM, but that was nearly twenty-five years ago, and the image-generation technology available today was likely unimaginable back then.”

“Given the relentless advancement in artificial intelligence models,” he added, “we have some concerns about the lines these cases draw, but we are not free to redraw them ourselves.” 

In a concurrence joined by Judge Michael Kolar, Lee called on the Supreme Court to revisit Ashcroft v. Free Speech Coalition, given how far image-generation technology has advanced since 2002. The Justice Department hasn't said whether it will seek Supreme Court review.

The ruling drew wide social media attention last week, with some posts describing it as legalizing AI-generated child sexual abuse material outright. Fact-checkers including Snopes found that characterization missing key context since the decision addresses only private possession, not production or distribution, both of which remain federal crimes.