The U.S. Court of Appeals for the Seventh Circuit has ruled that the federal government cannot constitutionally punish a person simply for possessing obscene AI-generated sexual imagery depicting entirely fictional minors in the privacy of their home, when no real child was used or depicted. The decision came in United States v. Steven Anderegg, decided on August 25, 2026.
The case involved Steven Anderegg, who federal prosecutors accused of using Stable Diffusion, a generative AI image system, to create hundreds of realistic images depicting fictional minors in sexual situations.
The government acknowledged during the case that the images underlying the charges did not depict actual children and could not be connected to any real child.
The investigation began after Meta reported potentially illegal material sent through Instagram to the National Center for Missing and Exploited Children. Authorities subsequently connected the account to Anderegg and searched his home and electronic devices.
Prosecutors charged him with multiple offenses, including producing and distributing the AI-generated material, transferring material to a person under 16, and possessing obscene virtual material.
The legal dispute before the Seventh Circuit concerned only the possession charge under 18 U.S.C. § 1466A(b)(1). The lower court had dismissed that count, finding the statute unconstitutional as applied to Anderegg's private possession of material that did not involve real children. The government appealed that ruling, but the Seventh Circuit upheld it.
The other charges—including production, distribution and transfer—were not dismissed by this appellate ruling.