Seventh Circuit Upholds Dismissal of Virtual-CSAM Possession Charge

On August 25, the U.S. Court of Appeals for the Seventh Circuit affirmed dismissal of a federal possession charge in *United States v. Anderegg*. The count concerned obscene virtual material that, according to the charge, did not depict an actual child. The court held that applying 18 U.S.C. Section 1466A(b)(1) to that alleged in-home possession was unconstitutional.

The decision relies on the Supreme Court's distinction between material involving actual children and virtual depictions, as well as the limited constitutional protection for mere possession of obscenity in the home. The panel treated the appeal as a narrow question about the possession count before it.

The court did not hold that material involving actual children is protected. Nor did it decide whether production, distribution, transfer, or conduct beyond the charged in-home possession could be prosecuted. The opinion notes that the defendant faced separate production and distribution counts, which were not the issue in this appeal.

The ruling is also not a general approval of AI-generated sexual material. It applies existing First Amendment precedent to the facts alleged in this case, including the absence of an actual child in the images at issue.

The panel acknowledged that generative-image technology can make virtual images harder to distinguish from images involving real children. But it concluded that lower courts remain bound by Supreme Court precedent unless that precedent changes. In a concurrence, two judges said updated Supreme Court guidance could be useful as image-generation technology advances.

For AI policy and safety work, the case highlights a legal boundary that turns on how material was made, whether an actual child was involved, and the conduct charged. It does not alter laws prohibiting exploitation of real children or resolve future challenges involving different facts.