Non-linear interactions between collective modes play a definitive role in far out of equilibrium dynamics of strongly correlated electron systems. Understanding and utilizing these interactions is crucial to photo-control of quantum many-body states. One of the most surprising examples of strong mode coupling is the interaction between apical oxygen phonons and Josephson plasmons in bilayer YBa$_2$Cu$_3$O$_{6+x}$ superconductors. Experiments by Hu et al (2014). and Kaiser et al. (2014) showed that below Tc, photo-excitation of phonons leads to enhancement and frequency shifts of Josephson plasmon edges, while aboveTc, photo-excited phonons induce plasmon edges even when there are no discernible features in the equilibrium reflectivity spectrum. Recent experiments by Van Hoegen et al. (2019) also observed parametric generation of Josephson plasmons from photo-excited phonons both below Tc and in the pseudogap phase. In this paper we present a theoretical model of phonon-plasmon three wave interaction arising from coupling between the oxygen motion and the in-plane superfluid stiffness. Analysis of the parametric instability of plasmons based on this model gives frequencies of the most unstable plasmons that are in agreement with experimental observations. We also discuss how strong parametric excitation of Josephson plasmons can explain pump induced changes in the TeraHertz reflectivity of YBa$_2$Cu$_3$O$_{6+x}$ in the superconducting state, including frequency shifts and sharpening of Josephson plasmon edges, as well as appearance of a new peak around 2THz. An interesting feature of this model is that overdamped Josephson plasmons do not give any discernible features in reflectivity in equilibrium, but can develop plasmon edges when parametrically excited. We suggest that this mechanism explains photo-induced plasmon edges in the pseudogap phase of YBa$_2$Cu$_3$O$_{6+x}$.
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