WP Engine vs Automattic: 8% WordPress Royalty Allegations Emerge

WP Engine’s legal fight with Automattic and WordPress co‑founder Matt Mullenweg has taken a new turn: in a third amended complaint filed during discovery, WP Engine says it unearthed previously sealed documents that show Mullenweg demanded an 8% royalty on WP Engine’s revenues, planned to press the same demands on as many as ten other hosts, and even sought to pressure Stripe to terminate WP Engine’s payment contract. (wpengine.com

Background​

The dispute between WP Engine and Automattic has its roots in competing views about how commercial players should use the WordPress name while supporting the open‑source project that underpins much of the web. WP Engine, a major managed WordPress host, sued Automattic and its CEO Matt Mullenweg in October 2024 alleging defamation, abuse of power, and attempted extortion after Mullenweg publicly criticized WP Engine and Automattic took steps that WP Engine says interfered with its access to WordPress.org resources. Automattic responded with counterclaims asserting trademark misuse and deceptive branding. (theverge.com
The fight has already produced a preliminary injunction restoring WP Engine’s access to WordPress.org and a mixed set of procedural rulings: a Northern District of California order allowed the majority of WP Engine’s claims — including intentional interference, unfair competition, and defamation — to proceed while dismissing others. Since then, the parties have traded amended complaints, counterclaims, and motions to dismiss, and the litigation has moved into discovery. (techcrunch.com

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What’s new in the Third Amended Complaint​

WP Engine’s February 2026 filing claims newly unredacted documents show:

• Matt Mullenweg communicated a demand for a fixed royalty — 8% of monthly gross revenue — for WP Engine’s use of the WordPress brand, a figure Automattic told WP Engine represented tens of millions of dollars a year. (arstechnica.com
• The same communications allegedly indicate a plan to press similar royalty demands against as many as ten other hosting companies, although the complaint redacts most names and only asserts that Newfold Digital is already paying for trademark use. (techcrunch.com
• Documents WP Engine says were produced in discovery include an email from Mullenweg to a senior Stripe executive asking Stripe to “cancel any contracts or partnerships with WP Engine,” a move WP Engine frames as an attempt to strangle its business after the lawsuit was filed. (searchenginejournal.com

Those are WP Engine’s allegations; Automattic responds that the filing is a rehash of previously dismissed or rejected claims and that there is nothing substantively new. Automattic maintains its position that it has legitimate concerns about how some commercial entities use WordPress trademarks and contribute to the open‑source ecosystem. (techradar.com

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Timeline and procedural posture​

A short timeline helps make sense of the procedural posture:

• September–October 2024: Dispute becomes public after Automattic signals trademark concerns and Mullenweg publicly criticizes WP Engine. (theverge.com
• October 2024: WP Engine files suit alleging defamation, abuse of power, and attempted extortion; moves for preliminary relief to restore access to WordPress.org resources. (techcrunch.com
• December 2024: A federal judge issues a preliminary injunction restoring WP Engine’s access to WordPress.org and related services. (techcrunch.com
• September 2025: The court issues an order on a motion to dismiss that allows the majority of WP Engine’s claims to proceed. (docs.justia.com
• October–November 2025: Automattic files counterclaims and WP Engine files to dismiss those counterclaims. (automattic.com
• February 2026: WP Engine files its Third Amended Complaint with newly unredacted evidence it says was produced in discovery. (wpengine.com

This is an active federal case; factual determinations remain for the court. The filings and public comments reflect aggressive positioning by both sides rather than adjudicated findings.

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The 8% royalty claim — numbers, context, and plausibility​

At the center of headlines is the 8% figure Automattic allegedly asked for as a royalty on WP Engine’s monthly gross revenue. According to exhibits referenced in WP Engine’s filings and reported contemporaneously, Automattic’s letter proposed a seven‑year license that would have required approximately 8% of WP Engine’s revenues — a number Automattic said reflected a business analysis. In public comments, Mullenweg acknowledged commercial negotiations and said payment or contributions were part of seeking an equitable resolution. (arstechnica.com
Why does this matter? The dollar amounts involved are substantial: an 8% revenue royalty on a business the size of WP Engine would translate into tens of millions of dollars per year. That scale is why the demand, if accurately characterized, is framed by WP Engine as punitive or extortionate and by Automattic as a necessary exchange for using valuable brands that carry community trust. (arstechnica.com
Legal and practical context:

• Trademark value vs. open‑source norms: Automattic argues it controls commercial rights to WordPress‑related marks and can license them. Critics say WordPress’s status as an open‑source project and the WordPress Foundation’s stewardship complicate claims that broad licensing is necessary or appropriate. (automattic.com
• Fair use defense: WP Engine contends its use of the WordPress name is nominative and consistent with industry practice, which is a standard fair‑use trademark defense for referring to the underlying open‑source software. Trademark law supports nominative use where a product or service must be identified by name. Whether WP Engine’s specific conduct fits within fair use will be a material legal dispute. (arstechnica.com

At present, the 8% figure appears in exchanged letters and negotiation documents and is emphatically contested by WP Engine. The court has not adopted a ruling that the 8% demand was lawful or unlawful — it’s an allegation and negotiation position amplified by the parties’ public fight. Readers should treat the 8% figure as a contested bargaining position revealed in discovery rather than an established legal obligation. (arstechnica.com

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The Stripe allegation: escalation beyond trademark letters​

One of the more startling claims in WP Engine’s latest filing is that Mullenweg emailed a Stripe executive asking the payments company to cancel WP Engine’s contract and threatening that Automattic could exit contracts if Stripe did not comply. WP Engine argues this is evidence Automattic sought to harm WP Engine’s business beyond normal commercial negotiation. (searchenginejournal.com
If accurate, the Stripe outreach would be notable for three reasons:

• It would represent direct pressure on third‑party commercial relations, moving beyond in‑house trademark enforcement into marketplace interference.
• It raises potential tort claims such as intentional interference with contractual relations, which WP Engine has alleged and which survive past the motion to dismiss. (docs.justia.com
• It shows how technology litigation can expand into commercial and financial choke points, implicating payment processors, partner ecosystems, and customer trust.

That said, the record again is WP Engine’s allegation based on discovery materials it submits to court; Automattic disputes such characterizations. We have reporting that corroborates the existence of an email in which Mullenweg urged Stripe to sever ties, but the interpretation of motive and context will be litigated. Journalistic caution is warranted: the email’s existence (as alleged) is different from a judicial finding that it constituted wrongful conduct. (searchenginejournal.com

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Newfold Digital, "ten other hosts," and redactions — what we actually know​

WP Engine’s complaint asserts that Automattic was in talks with other hosting companies about trademark licensing or royalties and that Newfold Digital (the company behind brands such as Bluehost and HostGator) is already paying Automattic for trademark use, according to WP Engine’s filings. The complaint alleges communications with up to ten other hosts, but many names in the exhibits remain redacted. (techcrunch.com
Key points:

• The presence of Newfold as a named counterparty appears in filings and public reporting; that part of the complaint is not fully redacted. (techcrunch.com
• The identities of the other hosts WP Engine says were targeted are mostly redacted, so independent verification of the broader “ten hosts” claim is limited to the documents WP Engine included in its submission. (techradar.com

Because redactions obscure much of the detail, readers should be wary of extrapolating a broad industry campaign from the current public record. WP Engine’s allegation that Automattic intended to or did approach a cohort of competitors for licensing discussions is serious, but the complaint’s redactions limit outside confirmation at this time. Where documentary evidence has been unredacted, WP Engine has highlighted it in its filings; where redaction remains, the court and discovery will be the forum to test and, if necessary, unseal additional material. (techcrunch.com

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What the court has already decided — procedural guardrails​

This litigation has not been resolved substantively, but the court has already shaped the field of play:

• A preliminary injunction ordered Automattic to restore WP Engine’s access to key WordPress.org resources, signaling that a judge found WP Engine likely to suffer irreparable harm absent relief. That order was a time‑limited remedy and did not resolve liability. (techcrunch.com
• A motion to dismiss order issued by Judge Araceli Martínez‑Olguín in September 2025 allowed the majority of WP Engine’s claims — intentional interference, unfair competition, and defamation among them — to proceed, while dismissing or narrowing other counts. That order set the case for discovery and shaped the party filings that followed. (docs.justia.com

Those rulings mean this is not a garden‑variety commercial dispute: the court recognized arguable harms on both sides worth factfinding. The litigation is now deep in discovery, which is often where documents, emails, and depositions either corroborate or undermine headline assertions.

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Legal and policy analysis — trademarks, fair use, and open‑source governance​

The WP Engine–Automattic fight sits at the intersection of several legal and normative regimes: trademark law, fair use doctrine, and the governance norms of open‑source ecosystems.

Trademark law vs. nominative fair use​

Trademarks are designed to prevent confusion and protect reputation. But when a party wants to refer to an open‑source software project by name — e.g., "WordPress" — courts frequently allow nominative fair use if:

• The product or service cannot be readily identified without using the trademark;
• Only so much of the mark is used as necessary; and
• The use does not imply sponsorship or endorsement by the trademark holder.

WP Engine argues it has long engaged in nominative use consistent with industry practice; Automattic argues that WP Engine’s branding and conduct go beyond permissive use and into consumer confusion and exploitative commercialization. The outcome will depend on detailed factual findings about WP Engine’s branding practices, consumer perceptions, and how the WordPress marks were displayed in marketing and product offerings. (arstechnica.com

Antitrust and unfair competition pressures​

WP Engine has raised antitrust‑flavored claims in prior amendments, arguing that Automattic’s conduct — if proven — might represent anticompetitive leveraging of control over community resources. Antitrust law is notoriously fact‑intensive: courts look for evidence of market power, exclusionary conduct, and anticompetitive intent or effect. The mere assertion that a dominant platform sought licensing payments would not, by itself, be dispositive; plaintiffs must prove harm to competition rather than merely to a single rival. (wpengine.com

Open‑source governance and norms​

Beyond legal doctrine, this dispute raises normative questions that are increasingly salient for the tech industry:

• Who owns the name of an open‑source project in a meaningful sense?
• What are the rights and responsibilities of entities that both steward open projects and run commercial businesses tied to those projects?
• How should community trust, volunteer contributions, and corporate sponsorship be balanced against legitimate trademark interests?

Automattic argues it must police misuse to protect users; opponents worry that trademark policing, when exercised by a powerful commercial actor, can chill contributors and create gatekeeping. The court will parse these tensions, but the underlying policy debate is broader than this single lawsuit. (automattic.com

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Business and ecosystem implications​

The litigation’s practical effects extend well beyond the parties. Consider these likely consequences:

• For hosting companies, the case sends a strong signal that brand use, contribution practices, and public positioning matter. Hosts will likely review how they reference WordPress and WooCommerce, and may change marketing to minimize perceived trademark risk.
• For open‑source contributors and volunteers, the dispute may create uncertainty around governance norms — who sets the rules and how are disputes resolved when commercial interests collide with community expectations?
• For enterprise customers and agencies that rely on WordPress hosting, the litigation raises short‑term service continuity concerns. WP Engine has highlighted attempts to pressure third‑party vendors; even if those allegations are litigated later, the possibility of payment or service disruption is a real risk companies factor into vendor selection. (searchenginejournal.com

There are also reputational stakes. Both companies have influential roles in the WordPress ecosystem: WP Engine as a major host and Automattic as a steward of several core projects. A prolonged battle erodes trust and can push developers and customers to opt for neutral alternatives or stricter compliance practices.

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Strengths, weaknesses, and courtroom flash points​

From the filings and public record, we can identify likely litigation flash points and the strengths and vulnerabilities of each side.

• WP Engine’s strengths: demonstrable business harm recognized by a preliminary injunction and a court order allowing core claims to proceed; documentary evidence produced in discovery that WP Engine says supports allegations of coercive conduct. (techcrunch.com
• WP Engine’s vulnerabilities: proving that nominative uses crossed into unlawful trademark misuse or that Automattic’s interactions with third parties amounted to actionable torts will require a fact‑intensive record. (arstechnica.com
• Automattic’s strengths: control over WordPress‑related marks and a public narrative about protecting the open‑source community; counterclaims alleging longstanding misuse may attract sympathy where evidence shows confusion among users. (automattic.com
• Automattic’s vulnerabilities: appearing to wield trademark claims to extract royalties from competitors — if proven in fact and context — would be damaging both legally and reputationally.

Key proof issues the court will sort through include the authenticity and context of the alleged Stripe email, the factual basis for the 8% royalty calculation and negotiations, and whether WP Engine’s branding objectively resulted in consumer confusion. Discovery depositions and unredacted documents will be decisive.

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Wider policy risks: precedent for open‑source ecosystems​

Beyond the immediate parties, the case carries precedent risk:

• A court acceptance of broad, recurring royalties tied to brand usage could encourage a commercialized approach to open‑source trademarks, pressuring hosts and vendors to pay licensing fees or face the risk of being cut off from community resources.
• Conversely, a judicial vindication of broad nominative use protections could reduce trademark attackers’ leverage and insulate open‑source ecosystem participants from monetized enforcement.

Either outcome will reverberate across hosting, plugin marketplaces, and the broader open‑source economy, shaping how stewardship and commercial rights coexist. The litigation thus functions as a de facto test case for modern open‑source governance and brand policing. (arstechnica.com

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What to watch next​

For readers tracking the dispute, key near‑term developments to watch include:

• Unsealing of any remaining redacted documents — these could confirm or complicate the “ten hosts” allegation.
• Depositions of senior executives — statements under oath can materially shift the litigation narrative.
• Rulings on WP Engine’s motion to dismiss Automattic’s counterclaims and vice versa — dismissals or narrowings will shape the trial footprint. (docs.justia.com

Beyond the courtroom, expect market responses: hosts may change branding, payment processors may review risk policies tied to litigation, and customers will watch for service continuity assurances.

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Practical guidance for companies and developers​

For companies building on open‑source platforms or running commercial services tied to community projects, this case suggests several prudent steps:

• Audit your use of project names and marks and document nominative usage rationales.
• Maintain clear contributions and community engagement records to demonstrate good‑faith support for the projects you rely on.
• Strengthen contractual relationships with vendors and payment processors to reduce susceptibility to third‑party pressure.
• Avoid ambiguous branding that could reasonably be read as implying endorsement by project stewards if no such endorsement exists.

These steps won’t immunize organizations from litigation risk, but they reduce vulnerability and improve defenses if disputes arise.

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Conclusion​

The WP Engine vs. Automattic litigation has moved from headlines into the nitty‑gritty of discovery, and the Third Amended Complaint adds provocative allegations — from an 8% royalty demand to efforts to enlist Stripe — that amplify the stakes for both parties and the wider WordPress ecosystem. The court has already signaled that many of WP Engine’s claims warrant further proceedings, and unredacted discovery materials now drive fresh headlines and renewed public scrutiny. (docs.justia.com
At its core, the dispute is more than a contract squabble: it is a contest over how trademarks, stewardship responsibilities, and commercial incentives interact in an ecosystem that is supposed to be collaborative and community‑driven. The case will test legal doctrines (trademark fair use, interference, antitrust), clarify norms for stewardship of open projects, and likely reshape how hosting companies and platform stewards manage brand and community relationships.
For developers, hosting providers, and enterprises that depend on WordPress, the immediate need is practical: watch the case closely, examine contractual protections, and prepare for the possibility of broader changes to how WordPress‑related brands are enforced and licensed. The legal fight between WP Engine and Automattic is still unfolding; its outcome will matter not just to the parties in court, but to anyone who builds on the open web. (techcrunch.com

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Source: TechRadar WP Engine-Automattic feud resurfaces with new claims of royalty fees and contract threats