It's also important to recognize that the terms of the agreement itself, as opposed to any public statements made by Systrom or anyone else at Instagram, is what a court will generally consider when determining parties' respective rights under the agreement.
The bigger problem, which seems to have been largely ignored, is the potential impact that the rights language can have when combined with other language in the new terms. The new terms include a series of representations, including two significant ones: first, that the user posting photographs isn't violating any privacy rights, and second, that the user will pay all royalties and fees owing to any person by virtue of a photograph being posted to Instagram. Separately, these terms can be trouble enough, but together with the license language detailed above, they have the potential for creating a nightmare scenario for users.
Consider for a moment a situation where a photographer uses Instagram to post a photograph of a professional athlete prior to a sporting event. Under Instagram's terms, it has the right to license that image for advertising purposes, and isn't obligated to share the license fees/royalties with you. It's bad enough that the photographer isn't sharing in the license fees for the commercial use of an image. However, under this scenario, the nightmare is just beginning. Since the photographer most likely didn't obtain a model release from the athlete featured in the photo, the athlete now has a claim for the use of his or her image in connection with advertising. Under the terms, the photographer who uses Instagram's service is responsible for paying "all royalties, fees, and any other monies owing any person by reason of [photos] you post on or through the Instagram service." So at the end of the scenario, Instagram gets to keep the license fees for the commercial use of the photo, and the photographer gets to pay the athlete who didn't sign a model release.
Mike Tomkins, news editor at Imaging Resource (www.imaging-resource.com), recognized a similar problem with the new Instagram terms. Writes Tomkins, "Should it choose to do so—and it's important to note that it hasn't yet stated any such plans—Instagram could sell user content to a third party. Users would have no say as to which parties the content was licensed to, nor how it could be used, and they would receive no payment for that usage beyond having received their access to the Instagram service free of charge."
The new terms also contain some fairly comprehensive language that attempts to limit Instagram's liability, requires its users to pay the cost of defending Instagram against claims made by virtue of images posted to the service and a provision that significantly limits the time in which a user may bring a claim against Instagram. The new terms also include an arbitration provision. Arbitration is a form of alternative dispute resolution; it allows people to resolve their disputes but without presenting their case to a court. As discussed in my article, "Arbitration, Friend Or Foe?" (DPP, November 2012, www.digitalphotopro.com/business/arbitration-friend-or-foe.html), there are pros and cons to arbitration that should be considered before entering into an agreement with an arbitration provision.