WP Engine alleges Automattic targeted 10 competitors for royalties

WP Engine has filed an amended complaint in its ongoing legal battle with WordPress co-founder Matt Mullenweg and his company Automattic, the parent company of WordPress.com. The new filing, submitted after WP Engine gained access to unredacted information during the discovery process—the legal phase where parties exchange information—introduces several new allegations. According to the complaint, Automattic was allegedly planning to target 10 other competitors with royalty demands similar to those aimed at WP Engine. Additionally, the filing alleges that Mullenweg contacted an executive at payment processor Stripe to pressure the company to cancel its contract with WP Engine.

The legal dispute, which began when WP Engine filed its original lawsuit in October 2024, centers on trademark usage and licensing fees. Automattic previously filed counterclaims alleging that WP Engine was abusing the WordPress trademark and engaging in deceptive marketing practices. In the amended complaint, WP Engine challenges the royalty demands made by Automattic, characterizing the proposed 8% rate as somewhat arbitrary and essentially based on what Mullenweg believed the hosting provider could afford.

The financial details of the royalty demands outlined in the filing include:

• An 8% royalty rate of WP Engine’s monthly gross revenues demanded by Automattic for use of the WordPress brand.
• An estimated royalty payment of about $32 million, which Mullenweg asserted would still leave WP Engine free cash-flow positive.
• A timeline of negotiations over the past 18 months regarding these trademark fees.

According to WP Engine, Mullenweg arrived at the 8% rate because he believed the company could afford it. Mullenweg previously estimated that this rate would amount to about $32 million, asserting that the company would remain free cash-flow positive and that the figure was fair based on negotiations over the past 18 months. The complaint also notes that Newfold, a hosting company portfolio currently paying royalty fees, is already paying Automattic for the use of its trademarks.

The amended complaint also details aggressive internal communications from Mullenweg. This includes threats that if the web hosting provider didn’t comply, he would start stealing its customers. To illustrate this, the complaint cites a message from Matt Mullenweg, Automattic founder: “If they don’t take the carrot, we’ll give them the stick.” The filing also alleges that Mullenweg used the term “nuclear war” to describe his approach to WP Engine’s defiance. Automattic has dismissed the amended filing, stating that the lawsuit is going nowhere and is a repackaging of old allegations that the court has already dismissed.

Why it matters

The dispute highlights the aggressive tactics used by Automattic to enforce trademark control over the WordPress ecosystem, raising questions about how open-source projects can monetize their brand without stifling competition.