WP Engine Alleges Automattic Planned Trademark Royalty Campaign Against 10 Competitors

Web hosting provider WP Engine has submitted an amended complaint containing significant new allegations in its ongoing legal dispute with WordPress co-founder Matt Mullenweg and Automattic, the parent company of WordPress.com. The filing claims that Mullenweg intended to impose royalty fees on 10 different hosting companies for their use of the WordPress trademark and allegedly attempted to persuade payment processor Stripe to terminate its contract with WP Engine.

The dispute centers on Mullenweg's assertion that WP Engine is monetizing the open-source WordPress project without providing adequate contributions to the community. He subsequently demanded that the hosting provider remit 8% of its monthly gross revenues as a trademark licensing fee.

The lawsuit, initially filed by WP Engine in October 2024, accused Automattic and Mullenweg of defamation and abuse of power. Automattic responded with counterclaims alleging trademark abuse and deceptive marketing practices by WP Engine.

Key Allegations in the Amended Complaint:

The third amended complaint incorporates previously sealed information obtained through the discovery process, which was unredacted after being withheld at Automattic's request. Notable revelations include:

• Broader Royalty Strategy: WP Engine alleges that Automattic planned to target 10 additional competitors with similar royalty demands. The complaint indicates that Newfold Digital, whose portfolio includes Bluehost and HostGator, is already remitting trademark payments to Automattic, with negotiations reportedly underway with other hosting providers.

• Stripe Intervention Attempt: The filing claims Mullenweg contacted a Stripe executive via email in an effort to pressure the payment processor to cancel WP Engine's merchant account following the lawsuit's initiation.

• Arbitrary Royalty Rate: WP Engine challenges the 8% royalty fee as lacking objective justification. Referencing Mullenweg's statements at a 2024 industry conference, the complaint asserts that the rate was essentially determined based on what Mullenweg believed WP Engine "could afford to pay." During that event, Mullenweg characterized the fee as based on "business analysis," estimating it would amount to approximately $32 million while still allowing WP Engine to maintain positive free cash flow.

• Aggressive Tactics: The amended complaint highlights allegedly hostile language used by Mullenweg, including threats to "start stealing" WP Engine's customers if the company failed to comply. Internal Automattic correspondence cited in the filing includes statements such as "If they don't take the carrot, we'll give them the stick" and references to "nuclear war" in describing the approach to WP Engine's resistance.

Automattic had not responded to requests for comment at the time of publication.

Sources:
Automattic files counterclaims against WP Engine
Matt Mullenweg's statements on WP Engine
WP Engine lawsuit filing
Automattic's legal response
WordPress vs. WP Engine drama explained
Mullenweg's comments at industry conference
Video: Mullenweg discusses royalty fee calculation