Lawsuit Against Instagram Over Terms of Service Changes Looks Flimsy — Funes v. Instagram
[Venkat Balasubramani with a comment by Eric]
Funes v. Instagram, 12-6482 (N.D. Cal. complaint filed Dec. 21, 2012)
Eric and I posted about Instagram’s recent TOS rev. Neither of us were particularly enthusiastic about the changes. (See Facebook’s Proposed Amended Sponsored Stories Settlement and Instagram’s Revised TOS.) Not surprisingly given the privacy bar’s affection for suing Internet companies, the changes sparked a lawsuit. But, the lawsuit is not a winner. 
The lawsuit asserts claims for breach of contract; violation of California’s publicity rights statute; breach of bailment (creative!); unfair competition. Plaintiff also asks for declaratory relief.
Courts have held that the imposition of a revised terms of service is not sufficient grounds for a lawsuit. (See Fineman v. Sony Network. Fineman is highly relevant, and involved similar arguments against a paid service.) An even bigger problem is that the revised terms are not in effect yet. Not only can the currently proposed terms be changed by Instagram (Instagram indeed made a few revisions in response to user outcry), the users can remedy any problems themselves—they can exercise self-help and leave the network before the new terms apply. In the event plaintiff does not withdraw its lawsuit (and she really should), I’m sure the many arguments will be fleshed out in Instagram’s motion to dismiss. In any event, here’s my initial summary.
Breach of contract: There’s nothing wrong with Instagram changing contractual terms on a prospective basis. To the extent plaintiff claims that the revised terms “interfere[] with and frustrate[] Plaintiff and the Class’ use of the Instagram’s service,” this is something Instagram is perfectly entitled to do.
Section 3344 claim: This is the personality rights statute that was at issue in Fraley. As I mentioned in my initial blog post about Instagram’s terms, I don’t believe the revisions really effected a material change. This language around sponsored stories was likely protective in nature, and brought about as a result of the Fraley settlement. In any event, Instagram’s blog post following the uproar expressly disclaimed its intent to broadly exploit user content in this manner.
Bailment: I don’t know what to make of the bailment claim. Query as to whether bailment applies to digital materials at all. [Eric’s comment: it doesn’t]. In any event, Instagram’s initial terms of service I’m sure allows it to retain any photographs uploaded to its service. Query as to whether Instagram can change the terms and have the terms apply to old content and not allow users to delete or disable the old content. It’s unclear as to whether Instagram allows users to delete their accounts or photos. In any event, this question is premature.
Section 17220 claim: Damages are limited under this section to money that has been paid by plaintiffs. In this case: zero dollars. Injunctive relief may be available, but again this is premature.
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Instagram’s TOS rollout was clunky, mostly because it did not anticipate user reaction around the key question of whether users could control monetization or off-platform use of their photos. FWIW, Instagram’s various public statements still do not adequately address this issue!
As to whether the revisions warranted a lawsuit the answer is obviously no. This is a classic example of lawsuits against social networks gone completely amok. For the most part, when a change is effected prospectively, plaintiffs will be left to argue unconscionability. As numerous cases make clear, this is an extremely difficult argument to make.
As Eric noted elsewhere, Section 3344 has a mandatory fee-shift, and could result in plaintiff having to write a check to Instagram.
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Eric’s Comment I can’t say I’m a fan of Instagram’s recent behavior, but I’m even less of a fan of publicity-seeking throw-lots-of-garbage-into-a-complaint-and-hope-something-sticks lawsuits like this one. It’s a sign of a slow news week (and a season when reporters have difficulty finding credible sources) when a bogus lawsuit like this gets any press coverage at all–other than the loud and mocking guffaw it deserves.
Related posts:
Facebook’s Proposed Amended Sponsored Stories Settlement and Instagram’s Revised TOS
Twitpic Modifies Terms and Claims Exclusive Rights to Distribute Photos Uploaded to Twitpic
TweetPhoto (now Plixi) To Start Charging For Twitter Celeb’s Pics
Facebook “Sponsored Stories” Publicity Rights Lawsuit Survives Motion to Dismiss–Fraley v. Facebook
Judge Seeborg Rejects Sponsored Stories Settlement For Now — Fraley v. Facebook