In a ruling with Wisconsin implications, 7th Circuit holds that defendant cannot be prosecuted for possessing AI-generated CSAM in his home
United States of America v. Steven Anderegg, No. 25-1354, 8/25/26
In a case that has generated national headlines, the Seventh holds that Anderegg cannot be prosecuted for producing CSAM using artificial intelligence.
Anderegg’s case began when Meta flagged the transmission of apparent CSAM via Instagram direct message sent to a minor. (p. 3). The accompanying messages made clear that the user had generated that image using Stable Diffusion, an AI image generator. (p. 4). Anderegg, who was unmasked as the user during the ensuing law enforcement investigation, apparently used his skills as a software engineer to tweak the AI model and generated “hundreds” of such apparently illicit images. (Id.). Relevant to this appeal, he was charged with possession of CSAM pursuant to 18 U.S.C. 1466A(b)(1), (d)(4).
Anderegg moved to dismiss, arguing that prosecution for possession violated his First Amendment rights. (p. 5). The district court agreed and the government appealed. (Id.).
To understand why Anderegg’s prosecution is foreclosed by the First Amendment, the Court takes the reader on a brief tour of the applicable SCOTUS case law and the important distinction between “obscene” material and actual CSAM that arises from that precedent.
First, as to “obscene” material, there’s no dispute that such material falls outside of First Amendment protections. (p. 6). However, under Stanley v. Georgia, that regulatory power does not extend into the person’s home–an exceedingly narrow exception, as the Court has otherwise blessed all manner of regulations which would impede the ability of that material to arrive in the home. (p. 7, 16).
Second, under New York v. Ferber and Osborne v. Ohio, material satisfying the definition of “child pornography” or (as it now termed) “child sexual abuse material” resides within its own constitutionally significant category; the obscenity test does not apply and the Government may prosecute a person for possessing that material inside the home so as to “stamp out” all levels of the distribution chain. (p.10).
Thus, the crucial question: Was the material Anderegg possessed CSAM? The Court reluctantly answers no, relying on Ashcroft v. Free Speech Coalition. (p.24). There, SCOTUS addressed a challenge to an earlier statute, which tried to criminalize computer-generated CSAM, and held that such computer-generated material did not fall within the absolute prohibition entailed by Ferber. (p.12). That’s because Ferber and its progeny are ultimately reliant on the practical need to prevent child abuse; in SCOTUS’s view, computer-generated images which did not involve real children could not be banned for the same reason. (Id.). Because the statute at issue did not include an obscenity standard it was therefore unconstitutional. (Id.).
Here, the Court concludes that Free Speech Coalition stands for the proposition that only “real” CSAM is entailed by the Ferber prohibition; Anderegg’s material was therefore merely “obscene.” Because the possession count focuses solely on possession within the home, Stanley forecloses prosecution under these facts. (p.23).
The Court concludes that this outcome is compelled by precedent, although it has “misgivings” about the reliance on Free Speech Coalition, a case involving dated technology and which obviously could not have anticipated the incredibly realistic rendering capability of modern AI tools. While it recognizes that the government has some interesting arguments about why this form of speech ought to come within the Ferber restriction, it therefore finds all of those arguments foreclosed by SCOTUS’s prior decision, thereby directly inviting further litigation in this area via its palpable discomfort with the holding it feels compelled to reach in this case.
In Wisconsin, our legislature recently made an attempt to directly criminalize AI-generated CSAM via § 948.125, which prohibits possession of “virtual child pornography.” Like the federal statute drafted post-Free Speech Coalition at issue here, Wisconsin’s statute also inserts an obscenity standard in an attempt to render the statute constitutional. As the Court points out here, this shows the legislature learned the wrong lesson from Free Speech Coalition. Even if the legislature now recognizes that AI-generated CSAM is potentially “obscene,” existing precedent does not allow prosecution for the possession of obscene material in the home. In other words, there is no middle ground within the existing SCOTUS precedent which recognizes a binary–“real” CSAM on one hand (totally verboten and OK to ban within the home) and “obscene” material on the other (unlawful, ok to regulate and restrict, but can’t ban within the home). Unless and until SCOTUS modifies its ruling in Ferber to sweep such AI-generated material into this policy-driven exception to an otherwise broadly-defined constitutional right, it appears that Wisconsin’s statute is likely to run into the same issues on appeal as its federal counterpart.
Finally, note that this case is only about Anderegg’s possession; there is no challenge to charges for production or distribution as, under the obscenity cases discussed above, there’s nothing improper about the Government’s regulation of those activities.