DYAC’s most famous bloopers have become perennial Facebook favorites and the source of hilarious year end lists. Here is one well-publicized example:

Such fare is popular with anyone who has suffered an embarrassing auto-correct, helping the DYAC site become a well-known brand. The site has not been a hit, however, with its new owners, who claim they got stiffed after they bought it last February.

According to owner Break Media, which also owns a collection of college humor websites, the number of visitors to the site dropped off dramatically and the number of user submissions dropped from 150 a day to 100 shortly after it acquired the site. In court papers, the company accused the previous owners of inflating the site’s popularity by buying traffic and by publishing fake text messages.

In a late December court decision, a federal judge rejected the accusations. The judge concluded instead that the decline in popularity was more likely the result of poor editorial and site management decisions, and pointed to a Break Media admission that “the editor I put in charge of most of the tumblers (sic) had gone far off the rails, posting images that were neither fun nor funny.”

As a result, the judge ordered Break Media to hand over $1 million of the purchase price it had had been holding back. Under the contract, the company agreed to pay $2.5 million in total for Damn You Auto Correct and about a dozen other lesser known sites like “Really ghetto” and “Parent fails.”

Break Media’s SVP of Marketing, Andy Tu, explained in a phone interview this week that the parties have now resolved the lawsuit. He added that Break has doubled the social media popularity of DYAC and also started a “damn you” merchandising line with desk calendars and a board game.

Media and legal types who want more details — check out the great analysis of the case by social media lawyers Venkat Balasubramani and Eric Goldman who were first to report it on the Technology and Marketing Law blog.

In case you missed it, a San Diego law firm this week sought to run to the rescue of Instagram users who are upset that the site will change its terms of service in January. These new terms are meant to help Instagram introduce advertising practices akin to its new parent company, Facebook, which turn users into pitchmen for products.

The lawsuit, which came after weeks of uproar about the maladroit way in which Instagram rolled out the proposed changes, made for good headlines. Too bad, then, the case stands as much chance of success as that petition to deport CNN’s Piers Morgan.

Writing on Eric Goldman’s respected Technology and Marketing Law Blog, Seattle lawyer Venkat Balasubramani described the case as “flimsy,” “borderline frivolous” and “an example of lawsuits against social networks gone completely amok.”

Balasubramani, who tracks social media cases closely, points out that that the revised terms haven’t even gone into effect (meaning that users can simply leave) and that, in any case, Instagram has the right to change its terms of service if it darn well pleases. You can see the full take-down, including Goldman’s view, here.

So why are the good folks at Finkelstein & Krinsk law firm filing this case in the first place? My own hunch is that it’s a way for the firm to get on the radar as part of California’s growing cottage industry of privacy lawsuits. This involves law firms who wait for the latest privacy outrage, and then race each other up the courtroom steps to file a case. Next, they ask for Facebook (or whoever) to pay them as part of a “privacy settlement” which typically compensates lawyers and activists — but not the users whose privacy was breached. In this case, though, the only payout Finkelstein & Krinsk are likely to receive is a clobbering by Facebook’s veteran legal team.

Overall, the Instagram episode is just the latest example of the ritualistic cycle of complacency-outrage-resignation that occurs whenever users discover that websites like Facebook and Google are providing a free service in exchange for advertising data.

(Image by ollyy via Shutterstock)

The FBI and Homeland Security announced the latest seizures in exultant press releases lauding the eighth phase of the “Operation In Our Sites” campaign under which the federal government is seizing the names of websites that sell counterfeit merchandise. Today’s haul included discount-louisvuitton-handbag.com and googlenfljerseys.com.

There is another odd phenomenon that is coinciding with these seizures which typically take place near events like cyber-Monday or the Superbowl. Namely, some of the seized websites are no longer just displaying a US law enforcement badge but are instead redirecting users to YouTube (NSDQ: GOOG) to watch a “public service announcement” about the effects of DVD piracy on the film industry.

This is strange for a couple of reasons. First, many of the sites have nothing to do with films but instead have names like massnike.com and mygolfwholesale.com — how exactly did federal agents come to favor the movie industry over the makers of footwear or golf apparel? (The films can be found on those two sites and others seized in last year’s raid; the films start playing after approximately 10 seconds).

Second, and more importantly, it is not clear if the federal government has the authority to use the seized property this way in the first place. To get a sense of what is taking place, it is helpful to know that the feds are relying on the civil forfeiture provisions of the U.S. Code. Those provisions in turn say that the procedure for seizing property are the same as those set out in a 1970 federal drug law. Significantly, the drug law sets out specific measures about what the U.S. government can do with the property it seizes.

Legal eagles can have fun reviewing the following provisions but the long and short of it is that it appears that the feds are supposed to sell or destroy the material they seize:

(h) Disposition of property
Following the seizure of property ordered forfeited under this section, the Attorney General shall direct the disposition of the property by sale or any other commercially feasible means

[...]

(i) Authority of the Attorney General
With respect to property ordered forfeited under this section, the Attorney General is authorized to

(1) grant petitions for mitigation or remission of forfeiture, restore forfeited property to victims of a violation of this subchapter, or take any other action to protect the rights of innocent persons which is in the interest of justice and which is not inconsistent with the provisions of this section;
(2) compromise claims arising under this section;
(3) award compensation to persons providing information resulting in a forfeiture under this section;
(4) direct the disposition by the United States, in accordance with the provisions of section 881 (e) of this title, of all property ordered forfeited under this section by public sale or any other commercially feasible means,

These provisions mean it is hard to figure out the legal basis for what Homeland Security is now doing with the seized websites. The law seems to demand that the federal government sell or dispose of the domain names — not commandeer them for a public relations campaign. What the agency is doing would be akin to the FBI seizing a cocaine baron’s Lamborghini and then keeping it for a drug awareness project.

The website seizures are already receiving scrutiny from groups like the Electronic Frontier Foundation which has raised First Amendment concerns and compared the practice to wiping a place off the map. The public service announcements, which were first noted by Wired TechDirt, seem to raise even more concerns.

The fed’s cyber-Monday campaign also coincides with similar large scale seizures by private actors like Chanel which recently nuked another 200 websites through a civil lawsuit. Venkat Balasubramani, who reported the story on Eric Goldman’s blog, has noted that the legal authority for these seizures is also shaky and that, at this rate, brand owners may not even need controversial SOPA legislation to take down piracy sites.

[UPDATE: Thanks to Mike Masnick of TechDirt for sharing that the Homeland Security video is actually the property of NBC (NSDQ: CMCSA) and was initially made for a New York City anti-piracy campaign. Ironically, the feds may not have paid to license the video. See Mike's excellent reporting here.]