The lawsuit, filed by an Instagram user in a federal court in San Francisco, accused the company of a breach of contract among other claims.
Facebook spokesman Andrew Noyes said that the lawsuit is baseless and Facebook will defend itself.
The giant social network paid $715 million to acquire Instagram, a service that allows users to edit photos using filters and share them on the web, earlier this year.
Instagram’s introduction of its revised terms of service last week created a furor among users as suspicions rise that it would sell photos of users without due compensation. The new service terms also provided a take-it-or-leave-it arbitration clause that tells users to waive their rights to join a class action suit against the company.
Existing service terms that would expire in the middle of January does not mention waiving of user rights to arbitration.
Chief Executive and Instagram founder Kevin Systrom had to retreat days following the announcement of the new terms of service, prompting him to delete some provisions about the display of photos without paying the original user.
But Instagram is keeping the language that allows it to place ads relevant to user content. It also declares that it reserves the right to not disclose the identity of advertisers by saying: “that we may not always identify paid services, sponsored content, or commercial communications as such.” The mandatory arbitration clause also remains on the new service terms.
Instagram is being sued by a San Diego-based law firm called Finkelstein & Krinsk, who says that customers who do not like the new terms can quit the service, which also results to losing the photos uploaded to Instagram.
“In short, Instagram declares that ‘possession is nine-tenths of the law and if you don’t like it, you can’t stop us,'” said the lawsuit.
Senior lawyer of the Electronic Frontier Foundation Kurt Opsahl, a vocal critic of Instagram, said that he welcomed the news about the service’s rolling back of its advertising terms and its intention to explain their plans in the future.
Opsahl however, raised the issue that Instagram’s new terms no longer guarantee that private photos would remain private. He mentioned a similar act of Facebook before for changing settings depriving users of making some of their information private which also create a similar furor among users.
“Hopefully, Instagram will learn from that experience and refrain from removing privacy settings,” he said.
Some experts believe the lawsuit to be of little merit though. Respected lawyer Venkat Balasubramani writing for Eric Goldman’s Technology and Marketing Law Blog says that the case is “flimsy,” “borderline frivolous” and “an example of lawsuits against social networks gone completely amok.”
Balasubramani keeps tracks of social network issues. He noted that the revised terms have not even gone into full effect yet, so Instagram still as the right to change its terms if it pleases.