Wednesday, 2 January 2013

Instagram's New Terms Cause Backlash and a Class Action Lawsuit

Photo sharing site Instagram found itself in hot water when it released updated terms of service on 18 December.  Users and commentators alike speculated that the shifts in the terms of service meant that Instagram intended to employ user content on the site for commercial purposes.  Essentially, the new terms give Instagram the right to use and the ability transfer its right to use, user content without compensation of any kind to users.  The new terms also simultaneously limited the rights of users to engage in class action lawsuits against Instagram, limited damages to $100, waived users' ability to obtain injunctive relief, limited the statute of limitations to one year, and required agreement to arbitration.  The announcement caused an outcry on the internet, and Instagram released a public statement on the site’s blog attempting to clarify the terms and quell the fear and fury surrounding the changes.  The terms have again been modified from the previous proposed version, however much of the terms users find most egregious remain present.  Although there is conflicting information, some reports state that as much as 25% of Instagram’s users deleted their accounts over the new terms, which are to come into force 19 January, 2013. 

However, a loss of users is not the only problem looming for the site—on 21 December, 2012, a class action lawsuit was filed against Instagram in U.S. District Court for the Northern District of California related to the new terms, Funes v. Instagram Inc., 12- CV-6482 (N.D. Cal.).  Essentially, the complaint theorizes that with its new terms Instagram is appropriating users’ property and then shielding itself from liability for doing so.  The plaintiff brings claims for breach of contract for violation of the implied covenant of good faith and fair dealing, for violation of California Civil Code §3344 (the statute protects the individual's ability control the commercial use of his or her name, image, likeness, or other aspects of one's identity), breach of bailment, and for violation of California business law.  The case also seeks declaratory relief regarding the lawfulness of Instagram’s conduct as well as injunctive relief and attorney’s fees.  The lawsuit appears to be the first of its kind.  

Even though Instagram amended its proposed terms of service, attempting to provide some clarification on 20 December, the new terms still grant Instagram “a non-exclusive, fully paid and royalty-free, transferable, sub-licensable, worldwide license to use the Content that you post on or through the Service.”  It seems that many photo sharing, blogging, and cloud file storage websites have terms granting some sort of limited license related to user content to the hosting site.  However, the license Instagram proposes has much greater breadth than those included in most standard terms.   

Although it is unclear whether users will have any success in a lawsuit against Instagram, these events have important implications.  This case may signal a shift in the way user content is utilized by host sites, as well as in users’ ability to contest terms they find egregious through legal process.  As more photographers and artists rely on the internet for marketing and the ability to store images via cloud computing, the terms of service employed by hosting sites will be of critical importance to those who are concerned about how and where their images may be used in the future.