Minecraft 1.16.5 FML 36.0.0
Gamemode: Multiplayer survival
Issue: Upgrading to a diamond backpack replaces items inside with the content of the last created Diamond backpack, these items are duplicated and are not shared between the different backpacks (Oposite to an Ender chest behavior).

To recreate:

1. Craft a regular backpack, place items inside
2. Craft a second backpack, place items inside
3. Upgrade first backpack to diamond
4. Upgrade second backpack to diamond

Result: Second backpack content will mirror the first one.

Modlist:

• JEI Integration (by SnowShock35)
• YUNG's Better Caves (Forge) (by YUNGNICKYOUNG)
• Save My Stronghold! (Forge) (by YUNGNICKYOUNG)
• Bookshelf (by DarkhaxDev)
• Upgrade Aquatic (by TeamAbnormals)
• Curious Elytra (Forge) (by TheIllusiveC4)
• Better Advancements (by way2muchnoise)
• Biomes O' Plenty (by Forstride)
• Decorative Blocks (by stohun)
• YUNG's API (Forge) (by YUNGNICKYOUNG)
• Fairy Lights (by pau101)
• Curios API (Forge) (by TheIllusiveC4)
• GraveStone Mod (by henkelmax)
• YUNG's Better Mineshafts (Forge) (by YUNGNICKYOUNG)
• Macaw's Bridges (by sketch_macaw)
• Enhanced Celestials - Blood Moons & Harvest Moons (by Corgi_Taco)
• Macaw's Furniture (by sketch_macaw)
• Caelus API (Forge) (by TheIllusiveC4)
• Savage & Ravage (by TeamAbnormals)
• Absent by Design (by Lothrazar)
• Just Enough Resources (JER) (by way2muchnoise)
• AutoRegLib (by Vazkii)
• Sophisticated Backpacks (by P3pp3rF1y)
• Snow Under Trees (by bl4ckscor3)
• AttributeFix (by DarkhaxDev)
• Decorative Blocks modded compat (by Evo_934)
• Alex's Mobs (by alex1the1666)
• Xaero's World Map (by xaero96)
• Buzzier Bees (by TeamAbnormals)
• Quark (by Vazkii)
• KleeSlabs (by BlayTheNinth)
• Tool Belt (by gigaherz)
• Dynamic Surroundings (by OreCruncher)
• Waila Harvestability (by squeek502)
• RandomPatches (Forge) (by TheRandomLabs)
• Xaero's Minimap (by xaero96)
• Create (by simibubi)
• The Endergetic Expansion (by TeamAbnormals)
• Clumps (by Jaredlll08)
• Just Enough Items (JEI) (by mezz)
• Enchantment Descriptions (by DarkhaxDev)
• Citadel (by alex1the1666)
• Abnormals Core (by TeamAbnormals)
• Simple Farming (by enemeez1)
• Curio of Undying (Forge) (by TheIllusiveC4)
• AppleSkin (by squeek502)
• Overloaded Armor Bar (by tfarecnim)
• Hwyla (by TehNut)
• Optifine

I am not sure which version of the mod you are on and I am not able to recreate with the latest version. Can you try to recreate with the latest?

Actually, what mod have you used to craft the backpack? just the regular vanilla crafting table?

It says version 1.16.4-2.1.1.144, I'm just using the regular crafting table. I will upgrade to the latest version to see if the issue still exist.

I believe I have just found the culprit - when inventory tooltip (one displayed when shift is pressed down) of a backpack output from a recipe was viewed in JEI (in the recipe view) it caused the link to be added to the base recipe output and then any time that recipe was used the resulting backpack was linked to the same storage. with latest version this cannot happen as the link will never get set based on just trying to view inventory tooltip if the backpack hasn't had storage link set previously.

Updating worked, guessed it was already fixed but it's interesting to find why that bug was a thing. Best backpack mod ever kudos to you!