Instagram's change to its terms of service didn’t just bring with it an outcry on par with SOPA. Earlier today, reports emerged that it brought a class-action lawsuit.

Though Instagram pulled back on its proposed changes, at least somewhat, that wasn't enough to stop the machinery of justice from carrying on apace.

Instagram made an extremely unpopular move when it made an alteration to its terms of service, which seemed to allow the company free reign over the rights to photos uploaded to the company's servers. This measure included allowing Instagram the right to resell those pictures to whomever it wished, and without having to cut in the people who actually took the pictures and did the uploading.

It didn't take long for Instagram users to cry foul – and with sufficient volume to make even Instagram backtrack a bit – but the backtracking is ringing hollow with many users which in turn led to the class-action lawsuit.

Perhaps even worse was the provision that while Instagram users who didn't much care for Instagram's colossal rights grab could leave the service, the pictures they would leave behind would still remain Instagram's property.

The lawsuit itself reportedly describes the practice: "In short, Instagram declares that ‘possession is nine-tenths of the law, and if you don't like it, you can't stop us’."

It's clear that Instagram needs to start earning. Facebook shelled out quite a bit for Instagram – originally around $1 billion, though since some of that was in Facebook stock, which sank quite a bit since the IPO. And not surprisingly, Facebook wants some return on that investment.

This move isn't going to win Facebook and Instagram any friends; a large if as yet unquantified number of users have fled the service since, and that's leaving Instagram – not to mention new parent company Facebook – with a string of bad options in its wake, especially considering that it was starting to catch on with top brands in large numbers.

From a marketing standpoint, this is a nightmare. Instagram CEO Kevin Systrom's recent backtracking likely rings hollow to many, and a class-action lawsuit is not something Facebook needed right now in the face of a variety of other problems.

With shareholders now watching the company's every move, waiting for a sign of weakness to signal a mass exodus for the door and the sell button, the issue only gets worse.

This isn't likely to end well for Instagram or for Facebook. Those who were interested in using the Instagram service aren't likely to follow up on that interest with the possibility that their work could be used just anywhere with no say, or compensation, on their part. It might be different if Instagram made that rights grab with the promise of a cut for users – amateur and even professional photographers might well jump at the chance to get what amounts to a powerful and well-connected corporate agent actively working to sell their work – but in its current form this isn't likely to pass legal muster, and it's even less likely to appeal to users.

It's a bad setting all the way around, and hopefully Instagram can catch on before the lawsuit forces its hand.