A federal appeals court has affirmed the dismissal of a possession charge against a Wisconsin man who kept hundreds of AI-created sexually explicit images depicting children on his home devices, and the judges who signed the ruling openly warned that the Supreme Court precedent binding their hands may no longer make sense in the age of artificial intelligence.
The U.S. Court of Appeals for the Seventh Circuit ruled that its decision in the case of Steven Anderegg was compelled by the Supreme Court’s 2002 decision in Ashcroft v. Free Speech Coalition, which struck down restrictions on sexually explicit images of fictional children created without using actual minors. The justices reasoned at the time that the government’s interest in protecting children from exploitation did not apply in the same way when no real child was involved.
That was nearly a quarter-century ago. The technology that exists today, capable of producing images virtually indistinguishable from photographs of real children, was, in the court’s own words, “likely unimaginable back then.” And yet the precedent stands, and the Seventh Circuit said it could not recreate it.
Investigators seized devices from Anderegg’s Wisconsin home containing what they described as hundreds of AI-created sexually explicit images depicting children, Fox News Digital reported. He faced four federal charges: producing AI-created child sexual abuse material, distributing it, transferring it to a minor under 16, and possessing it.
A federal district court dismissed the possession charge on First Amendment grounds, citing the 2002 Supreme Court ruling. The Department of Justice appealed.
The Seventh Circuit affirmed the dismissal. Three remaining charges, producing, distributing, and transferring the material to a minor, remain intact and were not at issue in the appeal.
The distinction the court drew is narrow but consequential. Under current precedent, the government can prosecute the creation and distribution of AI-created child sexual abuse material, and it can prosecute anyone who transfers such material to a minor. But it cannot prosecute someone merely for possessing it in the privacy of his home, so long as no actual child was used in its creation.
What makes this ruling notable is not just the outcome but the concurrence. Judges John Lee and Joshua Kolar joined the decision but wrote separately to flag what they see as a growing crisis in the law. Judge Lee put it plainly:
“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, we have some concerns about the lines these cases draw, but we are not free to redraw them ourselves.”
That last line is the key. The judges acknowledged the problem. They signaled their discomfort. And they said, in effect: this is the Supreme Court’s mess to clean up.
Lee and Kolar went further. They cited research that found hundreds of child sexual abuse material images in a major dataset used to train image-generating AI, meaning that the line between “virtual” and “real” may be far blurrier than the 2002 Court imagined. But the judges noted that the government did not raise the AI training dataset issue in this particular case, and the record was insufficient to resolve it.
The implications are hard to overstate. If AI-created images are trained on datasets containing real abuse material, then the fiction that “no real child was harmed” begins to collapse. The ongoing prosecution of individuals for manufacturing child sexual abuse material underscores how seriously the justice system treats these offenses, except, apparently, when a defendant can claim the images were AI-created and kept at home.
The bitter irony is that the Supreme Court itself foresaw this problem. Justice Clarence Thomas, writing in the 2002 Free Speech Coalition decision, warned that advancing technology could eventually make virtual depictions indistinguishable from images involving real victims. He wrote:
“If technological advances thwart prosecution of ‘unlawful speech,’ the Government may well have a compelling interest in barring or otherwise regulating some narrow category of ‘lawful speech.'”
That was 24 years ago. The technological advances Thomas anticipated have arrived, and then some. AI image generators can now produce photorealistic depictions of children in sexually explicit scenarios with a few keystrokes. The legal framework has not kept pace.
Hans von Spakovsky, a senior fellow at Advancing American Freedom, told Fox News Digital that the appeals court “had no choice but to uphold the dismissal under the First Amendment” because of the Supreme Court’s ruling. He agreed with the Lee-Kolar concurrence and warned that the law is falling behind the technology.
“AI-created images are now virtualy indistinguishable from the real thing and some of these images be created based on real child sexual abuse material. Technology may have overtaken and overwhelmed the reasoning used in those prior decisions.”
The Department of Justice argued on appeal that the government should be permitted to prohibit possession of obscene virtual child sexual abuse material even when no actual child was involved in its creation. DOJ lawyers also warned that the rise of AI-created material could bog down investigators trying to identify real victims, because every AI-created image that enters the system forces law enforcement to spend time determining whether a real child is depicted.
That practical concern deserves attention. Every hour an investigator spends sorting AI-created images from real ones is an hour not spent rescuing an actual child. The flood of synthetic material does not just offend decency; it actively undermines the investigative apparatus designed to protect children.
Yet the Seventh Circuit’s hands were tied. The 2002 precedent says what it says, and only the Supreme Court can change it. The appeals court’s concurrence reads less like a legal opinion and more like a petition, a formal request for the high court to revisit a rule that no longer fits the world it governs.
Courts across the country have grappled with the tension between binding Supreme Court precedent and rapidly shifting circumstances. But few cases expose the gap as starkly as this one. A man had hundreds of sexually explicit images of children on his devices. A federal court dismissed the possession charge. And the appellate judges who upheld that dismissal openly asked the Supreme Court to fix the problem.
Anderegg still faces three federal charges. The production, distribution, and transfer counts were not affected by the lower court’s ruling and remain active. The case is not over.
But the possession charge, the simplest, most intuitive prohibition, is gone. The message sent by this outcome is difficult to square with any common-sense understanding of child protection. A person can create hundreds of photorealistic images of children being sexually abused, store them on personal devices, and face no legal consequence for the possession itself.
The legal system’s failure to protect children from exploitation takes many forms. Lenient sentencing in cases involving harm to minors has drawn public outrage in recent months. So have horrifying cases of child confinement and abuse that reveal how vulnerable children remain even in a system designed to protect them. The Anderegg ruling adds a new dimension: a legal framework that cannot keep up with the tools now available to predators.
The Seventh Circuit has done what it can. It followed the precedent. It flagged the problem. It practically begged the Supreme Court to act.
Congress could also intervene. Legislation narrowly tailored to address AI-created child sexual abuse material, particularly material trained on datasets containing real abuse images, could give prosecutors tools that the current framework denies them. But any such law would face the same constitutional test the 2002 ruling established, unless the Supreme Court revisits its reasoning.
Justice Thomas warned in 2002 that this day would come. Judges Lee and Kolar are warning now that it has arrived. The DOJ is warning that investigators are drowning in synthetic images while real children wait to be found.
The question is whether anyone with the authority to act will do so before the next case lands, and the one after that.
When the courts themselves are telling you the law is broken, the only real question is how long the people in charge plan to leave it that way.
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