The Seventh Circuit has upheld the dismissal of a possession charge for AI-created child sexual abuse images, citing Supreme Court precedent and warning Congress may need to act as technology outpaces the law.

In a case that shines a harsh light on the growing gap between modern technology and federal law, the U.S. Court of Appeals for the Seventh Circuit affirmed a lower court’s decision to dismiss a charge of possessing AI-created sexually explicit images depicting children. The defendant, Steven Anderegg, had been charged after investigators reportedly found hundreds of such images on devices seized from his Wisconsin home. Three other charges against him, including producing and distributing the material, and transferring it to a minor, remain intact, but the federal district court threw out the possession count on First Amendment grounds.

The Department of Justice appealed, arguing that the government should be able to prohibit even fictional or computer-created child sexual abuse material when no real children are used. But the appeals court said its hands were tied by a 2002 Supreme Court decision, Free Speech Coalition, which struck down restrictions on explicit images of fictional children, ruling that the law could not criminalize the possession of material when no actual minors were involved in its creation.

Writing for the court, Judge John Lee made clear the dilemma judges now face, given the relentless advance of artificial intelligence and the increasing realism of AI-created images. “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,” Judge Lee wrote.

He continued, “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.” Judge Joshua Kolar joined Lee in expressing unease, and both cited research showing that major datasets used to train AI image generators already contain hundreds of child sexual abuse images. Fox News Digital reported the details of the ruling and the mounting concerns from the bench.

Supreme Court precedent leaves lower courts powerless

The Seventh Circuit’s decision traces directly back to the Supreme Court’s 2002 ruling. In that case, the Court concluded that the government could not criminalize the possession of obscene images of fictional children if no real child was harmed in their creation. The result is a legal loophole that the Department of Justice argued should not apply to AI-created content that can now be nearly indistinguishable from real photographs.

Conservative legal voices have warned for years that the Supreme Court’s broad protections for virtual material could inadvertently shield disturbing new forms of child exploitation as technology advances. Hans von Spakovsky, a senior fellow at Advancing American Freedom, said the Seventh Circuit “had no choice but to uphold the dismissal under the First Amendment.” He added, “Unfortunately, AI-created images are now virtually indistinguishable from the real thing and some of these images be created based on real child sexual abuse material.”

Von Spakovsky did not hold back about the urgent need for lawmakers to revisit the issue. “Technology may have overtaken and overwhelmed the reasoning used in those prior decisions,” he said.

The Supreme Court itself anticipated this conflict decades ago. Justice Clarence Thomas, writing in the 2002 decision, warned that “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.’” The courts, however, cannot act without new legislation or a reversal from the Supreme Court itself.

AI blurs the line between fiction and crime

What once seemed a hypothetical legal debate is now a real-world challenge for law enforcement and prosecutors. AI models, trained on massive datasets, can produce images so realistic that even experts struggle to distinguish them from photographs. Judge Lee and Judge Kolar acknowledged that this technological leap calls the old legal boundaries into question, but said only the Supreme Court or Congress can draw new lines.

The ruling has left many conservatives and law enforcement advocates deeply concerned about the message this sends to would-be offenders, and about the inability of federal prosecutors to act against those who possess AI-created child sexual abuse material, at least under current law. As seen in high-profile cases like the Court’s recent 6-3 ruling on Trump’s mail-in voting executive order and the final verdict in the E. Jean Carroll case, the Supreme Court’s decisions routinely have far-reaching consequences for how the law is enforced nationwide.

The gap between the law as written and the world as it now exists is only growing wider. As the Court faces a loaded docket and mounting pressure to revisit old precedents, the question is not whether the law will change, but when, and at what cost. Internal debates over how to handle new technology are not unique to this case, as seen in the Supreme Court’s crowded June docket and other legal showdowns involving executive power, national security, and rapidly shifting facts on the ground.

Congress, not the courts, must close the loophole

For now, the Seventh Circuit’s hands are tied, and the Department of Justice’s options are limited. The responsibility falls to Congress to update federal law to address the harsh reality that technology has outpaced the doctrine crafted a generation ago. As Hans von Spakovsky and the Seventh Circuit judges have made clear, the judiciary cannot fill the gap alone.

Recent Supreme Court battles, whether over mail-in voting, presidential tariffs, or even the White House ballroom project, have underscored that when the law lags behind technology or political reality, the consequences can be both unpredictable and far-reaching. As in the Trump tariff case and the ongoing disputes over executive authority, only legislative action can provide durable answers.

Until Congress acts, federal courts will remain bound by precedent, even as AI continues to make old legal lines look obsolete. The cost of inaction isn’t measured in legal theory, it’s measured in the risks to real children, families, and communities forced to live with the consequences of elite indecision.

Lawmakers who value law and order can’t afford to look away while the law stands helpless against crimes born of new technology. The time to fix the law is now.