Automattic’s founder, Matt Mullenweg, has referred to WP Engine as “a cancer to WordPress.”
The saga of WordPress, Automattic, and WP Engine continues. As LowEndBox first covered on September 24, 2024, the situation within the hosted WordPress community and industry has continued to become more complicated.
A WordPress hosting company has taken legal action against Automattic Inc. and its founder, alleging that they orchestrated an extortion scheme aimed at forcing payments for the use of the trademark associated with the open-source WordPress software. WP Engine filed a complaint yesterday in the US District Court for the Northern District of California.
The lawsuit claims, “This is a case about abuse of power, extortion, and greed.” It emphasizes that “the misconduct at issue here is even more shocking because it took place in an unexpected setting—the WordPress open-source software community, which is built on the principles of freedom to create, operate, modify, and redistribute without barriers or constraints, for everyone.”
Furthermore, the lawsuit states that “in the past two weeks, Defendants have been executing a scheme to exclude WPE from the WordPress community unless it agreed to pay tens of millions of dollars to Automattic for a so-called trademark license that WPE does not even require.”
The complaint states that Mullenweg restricted WP Engine “from updating the WordPress plugins that it publishes through wordpress.org,” and “revoked login credentials for individual employees at WPE, which prevented them from accessing their personal accounts to utilize other wordpress.org resources, including community Slack channels designed for coordinating contributions to WordPress Core, the Trac system that enables contributors to propose tasks for WordPress, and the SubVersion system that oversees code contributions.”
The lawsuit brings forth allegations such as libel, slander, and attempted extortion, and requests a jury trial. It was filed alongside an exhibit that details Automattic’s demand for remuneration. A letter dated September 23 from Automattic’s legal representatives to WP Engine proposes “a mere 8% royalty” based on WP Engine’s estimated $400 million in yearly revenue, which amounts to roughly $32 million.
“WP Engine’s unauthorized use of our Client’s trademarks… has enabled WP Engine to unfairly compete with our Client, resulting in WP Engine’s unjust enrichment,” Automattic asserted in the correspondence.
Mullenweg co-created the WordPress software that was first launched in 2003 and established Automattic in 2005. Automattic operates the WordPress-based platform WordPress.com. On the other hand, the nonprofit WordPress Foundation, which Mullenweg also founded, states its mission is “to ensure free access, in perpetuity, to the software projects we support.”
Recently, Mullenweg published a blog entry claiming that WP Engine is “a cancer to WordPress,” asserting that they offer “something that’s been chopped up, hacked, and butchered to appear like WordPress, but in reality, they’re providing a cheap imitation and charging you more for it.”
Mullenweg expressed disapproval of WP Engine’s choice to disable the WordPress revision management function. He contended that WP Engine’s “branding, marketing, advertising, and their total commitment to customers is that they’re presenting you with WordPress, which is misleading,” adding, “And they’re profiting from that confusion. WP Engine requires a trademark license to operate their business.”
In another blog post and a speech at a WordPress conference, Mullenweg claimed that WP Engine does not provide significant contributions to the open-source project. He highlighted WP Engine’s financial backing from the private equity firm Silver Lake, stating that “Silver Lake doesn’t care about your Open Source principles. It solely seeks a return on investment.”
The lawsuit filed by WP Engine references commitments made by Mullenweg and Automattic nearly 15 years ago. “In 2010, in reaction to growing public concern, the source code and trademarks of WordPress were handed over to the nonprofit WordPress Foundation (which was established by Mullenweg), with Mullenweg and Automattic making extensive promises of open access for everyone,” the lawsuit asserts.
At the time, Mullenweg stated that “Automattic has transferred the WordPress trademark to the WordPress Foundation, the nonprofit dedicated to promoting and ensuring access to WordPress and related open source projects in perpetuity. This signifies that the most essential element of WordPress’s identity, its name, is now entirely independent from any company.”
WP Engine contends that Automattic and Mullenweg failed to disclose “that while they were publicly celebrating their supposed benevolence in moving this intellectual property from a private entity to a nonprofit, the Defendants had actually covertly reinstated irrevocable, exclusive, royalty-free rights in the WordPress trademarks back to Automattic on that very day in 2010. This indicates that, contrary to being ‘independent of any company’ as the Defendants had assured, the control over the WordPress trademarks effectively remained within Automattic’s grasp.”
WP Engine claims that the defendants are “misusing these trademarks for their own financial benefit and to the detriment of the community members.” Founded in 2010, WP Engine relied on the assurances given by Automattic and Mullenweg. “WPE is a true champion of WordPress, dedicating its entire operations to WordPress over other similar open-source platforms,” the lawsuit stated.
The demand from the defendants for WP Engine to pay tens of millions of dollars for a trademark license “arrived unexpectedly” and “provided WPE with less than 48 hours to either consent to pay or confront the repercussions of being banned and publicly discredited,” according to the lawsuit. WP Engine referenced Mullenweg’s “cancer” comment along with other actions, stating:
When WPE stood its ground, the Defendants executed their threats, initiating what they called a “nuclear” war against WPE. This campaign included publicly defaming WPE, sending harmful and derogatory messages directly into WPE customers’ software and across the Internet, issuing threats against WPE’s CEO and a board member, actively persuading WPE’s customers to switch their business to Automattic’s competing services (at a discounted rate, to add insult), and ultimately denying WPE and its customers the ability to access the wordpress.org portal and its servers. This blockade has stopped WPE from utilizing a range of features normally accessible to the WordPress community on the wordpress.org site.
According to the lawsuit, during discussions on September 17 and 19, “Automattic CFO Mark Davies informed a WPE board member that Automattic would ‘go to war’ if WPE did not consent to pay a significant share of its gross revenues—amounting to tens of millions of dollars—on an ongoing basis.” WP Engine argues that it does not require a license to utilize the WordPress trademark and never had a reasonable expectation that Automattic could demand fees for the usage of a trademark held by the independent nonprofit WordPress Foundation.
The lawsuit asserts that “WPE’s nominative uses of those marks to refer to the open-source software platform and plugin utilized for its clients’ websites are fair uses as per established trademark law, and they align with WordPress’ own guidelines and the customary practices of almost all businesses in this sector.”
Included in Exhibit A of the lawsuit is a letter addressed to WPE CEO Heather Brunner from a trademark attorney representing Automattic and its subsidiary, WooCommerce, which develops a plugin for WordPress.
“As you are aware, our Client holds all intellectual property rights worldwide pertaining to the renowned WOOCOMMERCE and WOO trademarks, as well as exclusive commercial rights granted by the WordPress Foundation to utilize, enforce, and sublicense the highly recognized WORDPRESS trademark, among others, along with all related intellectual property rights,” stated the letter.
The correspondence accused that “your obvious and extensive unauthorized use of our Client’s trademarks has violated our Client’s rights and misled consumers into incorrectly believing that WP Engine is authorized, endorsed, sponsored by, or otherwise connected to our Client.” Additionally, it claimed that “WP Engine’s entire business model relies on the employment of our Client’s trademarks… to deceive consumers into thinking there is a link between WP Engine and Automattic.”
The letter warned of impending legal action, asserting that Automattic “has the right to initiate civil litigation to secure an injunction and receive compensation for actual damages, a recovery of your profits, as well as our Client’s costs and legal fees.” It requests a detailed account of WP Engine’s profits, noting that “even a modest 8% royalty on WP Engine’s $400+ million in yearly revenue translates to over $32 million in annual lost licensing income for our Client.”
In its lawsuit, WP Engine seeks a “declaration from the court affirming that the Plaintiff does not infringe or dilute any valid, enforceable trademark rights held by the Defendants.” It is also pursuing compensatory and punitive damages.
Automattic released a statement addressing the allegations. “The complaint is fundamentally flawed,” the company asserted. “We firmly reject the claims made by WP Engine, which inaccurately portray the situation, and we intend to uphold our rights fully. Automattic is assured in our legal stance and will vigorously defend against this unfounded filing, while also seeking all possible remedies against WP Engine.”
Join the lively conversation on LowEndTalk about Automattic’s campaign against WP Engine. Is the rest of the WordPress hosting industry at risk? Let us know what you think!
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