Automattic planned to target 10 competitors with royalty fees, WP Engine claims in new filing

In a dramatic escalation of its legal battle against Automattic, WP Engine has filed a revised complaint featuring serious allegations against Matt Mullenweg, the co-founder of WordPress, and his company. The hosting firm contends that Mullenweg aimed to impose royalty fees on ten competing hosting companies for their use of the WordPress trademark. Furthermore, they claim he attempted to persuade Stripe, a payment processing firm, to terminate its partnership with WP Engine. At the core of this dispute lies Mullenweg's assertion that WP Engine is reaping profits from the open-source WordPress project without contributing anything back to the community. He has demanded that WP Engine pay 8% of its monthly gross revenues as a royalty for utilizing the WordPress brand. Originally filed in October 2024, WP Engine's lawsuit accuses Automattic and Mullenweg of defamation and abuse of authority. Automattic responded with counterclaims last year, alleging that WP Engine has been misusing the WordPress trademark and engaging in misleading marketing practices. The latest amended complaint marks WP Engine's third revision, made possible by new evidence uncovered during the discovery phase of the case. Previously sealed information, now unredacted, reveals that Mullenweg reportedly planned to target additional competitors with similar royalty demands. The amended complaint also indicates that Newfold, which owns hosting brands like Bluehost and HostGator, is already paying Automattic for trademark usage, with ongoing discussions with other companies. WP Engine alleges that Mullenweg reached out to a Stripe executive to pressure them into canceling WP Engine’s contract after the lawsuit was initiated. Additionally, WP Engine challenges the 8% royalty figure as arbitrary, citing Mullenweg's remarks at TechCrunch Disrupt 2024, where he claimed the rate was determined by what he believed WP Engine could afford to pay. Mullenweg indicated that the projected royalty payments could amount to about $32 million, suggesting that WP Engine would still remain profitable under such a plan. The filing also uncovers aggressive tactics allegedly employed by Mullenweg, including threats to WP Engine about customer retention, with quotes such as, 'If they don’t take the carrot, we’ll give them the stick.' He reportedly described his strategy toward WP Engine's noncompliance as akin to 'nuclear war.' As of now, Automattic has not issued a statement regarding these latest allegations.