Automattic plans to target 10 competitors with royalty payments, WP Engine admits in new filing


Web hosting company WP Engine has filed an amended complaint with new allegations that have raised eyebrows. ongoing legal battle with WordPress co-founder Matt Mullenweg and his company Automattic (the parent company of WordPress.com). The company now admits that Mullenweg intended to target 10 different hosting companies with royalty payments for their use of the WordPress trademark and tried to get payment processor Stripe to cancel its contract with WP Engine.

At the heart of the dispute, Mullenweg believes WP Engine is earned from the open-source WordPress project without contributing back to the community, and the hosting company is asked to pay 8% of its monthly gross income as a royalty fee for using the WordPress brand.

The suit, originally filed by WP Engine on October 2024accused Automattic and Mullenweg of abuse and abuse of power. Automattic filed it counterclaims last year, alleging that the hosting company was abusing the WordPress trademark and engaging in deceptive marketing practices.

In this latest filing, WP Engine amended its complaint for the third time after gaining access to information uncovered during the discovery process. The information, which has not been redacted, was previously sealed at Automattic’s request.

Notably, one of the new claims accuses Automattic of allegedly planning to target 10 other competitors with royalty claims similar to those aimed at WP Engine.

The complaint also says that Newfold, a company whose portfolio includes hosting providers such as Bluehost and HostGator, among others, has already paid Automattic for the use of its marks and that Automattic is in discussions with others. (The names of the other hosts were redacted in the complaint, which referenced email conversations between the companies and Mullenweg.)

WP Engine also alleged that Mullenweg reached out to a Stripe executive via email to pressure the company into canceling the WP Engine contract. This happened after WP Engine filed its lawsuit against Automattic, the complaint says.

The filing also challenged the 8% rate for royalty payments as somewhat arbitrary. Mention of Mullenweg’s comments at TechCrunch Disrupt 2024WP Engine claims that the Automattic founder essentially came up with the rate because it was what he thought WP Engine “could afford to pay.”

At Disrupt, Mullenweg responded to a question about how he settled on the 8% fee by saying it was based on a “business analysis.”

“If you estimate about $32 million – they will still be free cash-flow positive, and based on our estimates, and the negotiations over the last 18 months, we feel that this is a fair amount,” he said at the event.

Some new claims point to aggressive language Mullenweg allegedly used against WP Engine, such as threats that if the web hosting provider didn’t comply, he would start stealing its customers. “If they don’t take the carrot, we’ll give them the stick,” one of the quotes quoted from Automattic’s internal letter, for example.

The complaint also includes allegations that Mullenweg used the term “nuclear war” to describe his approach to opposing WP Engine.

Automattic did not respond to a request for comment by the time of publication.



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