The class action lawsuit filed Friday by the Southern California-based Finkelstein and Krinsk law firm called on the federal court to bar Instagram from changing its rules.
"Instagram is taking its customers property rights while insulating itself from all liability," the law firm said in the filing, which also demanded that the service pay its legal fees.
"In short, Instagram declares that 'possession is nine tenths of the law and if you don't like it, you can't stop us.'"
Facebook said the complaint was "without merit." "We will fight it vigorously," the social network added.
Changes to the Instagram privacy policy and terms of service had included wording that allowed for people's pictures to be used by advertisers at Instagram or Facebook worldwide, royalty-free.
Last week, Instagram tried to calm a user rebellion by apparently backing off the changes, due to come into effect from January.
"I want to be really clear: Instagram has no intention of selling your photos, and we never did. We don't own your photos, you do," Instagram co-founder and chief Kevin Systrom said in a blog post.
But the lawsuit, filed in San Francisco, argues that Instagram didn't backpedal enough and that customers who leave the service still forfeit their rights to any photos that they had previously shared on the service.
"The purported concessions by Instagram in its press release and final version of the new terms were nothing more than a public relations campaign to address public discontent," the complaint said.
Tens of thousands of Instagram users in the state of California are eligible to join the class action lawsuit.
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