WordPress Co-Founder & Automattic Sued For Attempted Extortion via @sejournal, @martinibuster

WP Engine, the managed web big precocious banned from WordPress.org, has filed a national suit against WordPress co-founder Matt Mullenweg and Automattic, alleging attempted extortion arsenic good arsenic seeking alleviation from trademark infringement claims.

The extremity of the national suit is to halt Mullenweg from continuing to “harm” WP Engine and the WordPress ecosystem arsenic good arsenic to clasp Mullenweg and Automattic accountable for their “broken promises and malfeasance.” Malfeasance refers to wrongful oregon amerciable behaviour that whitethorn impact violations of the instrumentality oregon unethical actions, peculiarly by idiosyncratic successful a presumption of authority.

What The 98 Page Lawsuit Is About

The TL/DR of the suit is that it’s “about maltreatment of power, extortion, and greed.” It states that the unfastened root WordPress ecosystem was built connected the committedness of the state to make with WordPress without immoderate constraints but that those promises were not kept and that the nonaccomplishment to support those promises constituted wrongful acts, including making mendacious statements to the IRS, among galore different accusations backed up with evidence.

WP Engine made the pursuing connection to Search Engine Journal:

“Matt Mullenweg and Automattic’s self-proclaimed scorched world run against WP Engine has harmed not conscionable our company, but the full WordPress ecosystem. The symbiotic narration betwixt WordPress, its assemblage and the businesses that put millions to enactment WordPress users, and beforehand the ecosystem, is based connected spot successful the promises of openness and freedom.

Matt Mullenweg’s behaviour implicit the past 10 days has exposed important conflicts of interests and governance issues that, if near unchecked, endanger to destruct that trust. WP Engine has nary prime but to prosecute these claims to support its people, bureau partners, customers, and the broader WordPress community.”

WP Engine’s suit asks for judgement connected these eleven points:

(1) Intentional Interference with Contractual Relations;
(2) Intentional Interference with Prospective Economic Relations;
(3) Computer Fraud and Abuse Act, 18 U.S.C. § 1030 et seq.;
(4) Attempted Extortion;
(5) Unfair Competition, Cal. Bus. Prof. Code § 17200, et seq.;
(6) Promissory Estoppel;
(7) Declaratory Judgment of Non-Infringement;
(8) Declaratory Judgment of Non-Dilution;
(9) Libel;
(10) Trade Libel; and
(11) Slander

Denial Of Trademark Infringement

The suit filed by WP Engine denies the assertion by Mullenweg that the usage of the connection “WordPress” to notation to the unfastened root task is taxable to licensing fees, asserting that not lone is the usage of the sanction of the task ineligible and indispensable successful bid to pass accusation that consumers need, WP Engine asserts that the usage of the sanction WordPress is freely utilized by the full WordPress assemblage and that said usage has been condoned by the suspect Mullenweg.

Many times, lawsuits are won oregon mislaid based connected the grounds provided and WP Engine’s suit offers grounds to backmost up each allegation made against Mullenweg and Automattic.

For example, the suit provides grounds that WP Engine was not misusing oregon infringing connected the trademarks and that Mullenweg had been afloat alert of WPE’s usage of the challenged terms.

• WP Engine’s rank successful the ‘Five for the Future’ programme is an acknowledgment that WPE was not infringing due to the fact that 1 of the requirements of rank is to not presently beryllium infringing connected trademarks
• Matt Mullenweg praised WP Engine connected March 21, 2023 astatine the DE{CODE} developer conference, contempt the information that WPE utilized the challenged presumption connected their website astatine the time. The suit quotes Mullenweg’s nationalist statement: “vote with your wallet. So erstwhile you enactment companies similar WPE, who don’t conscionable supply a commercialized service, but are besides portion of a wider unfastened root community, you’re saying, hey, I privation much of this successful the world.”
• Matt Mullenweg publically acknowledged successful an X livestream connected September 26, 2024 that helium knew WP Engine utilized the presumption “for years” but that helium had chosen not to instrumentality action.

Accusation Of False Statements To State Of California

The suit besides accuses that pursuing the authoritative incorporation of WordPress.org arsenic a non-profit that Mullenweg of publically transferred the WordPress trademark from Automattic to the non-profit WordPress Foundation but past secretly transferred it close backmost to Automattic done an exclusive sublicensable licence which allowed Automattic to power the WordPress trademark. This declaration betwixt the WordPress Foundation and Automattic is the ground of their accusation that Mullenweg had made mendacious statements to the authorities of California.

The suit asserts:

“Mullenweg failed to disclose this exclusive licensing statement betwixt his nonprofit (the WordPress Foundation) and his for-profit (Automattic) successful the WordPress Foundation’s taxation filings with the California government, claiming that determination were nary ‘contracts . . . betwixt [WordPress Foundation] and immoderate officer, manager oregon trustee . . . oregon with an entity successful which immoderate specified officer, manager oregon trustee had immoderate fiscal interest’ …This connection was false, fixed that Mullenweg was a manager of the WordPress Foundation portion besides having a fiscal involvement successful Automattic, the entity with which the Foundation entered into a trademark licence agreement—an evident self-dealing transaction constituting inurement nether national taxation law.”

Allegation: Mullenweg Made False Statements To IRS

WP Engine besides states that Mullenweg has made mendacious statements to the IRS.

The suit documents the following:

“It appears Mullenweg besides did not disclose the licence statement successful the WordPress Foundation’s filings with the IRS, and nary of WordPress Foundation’s fourteen years of publically disposable national reporting to the IRS indicates that the WordPress Foundation was compensated successful immoderate signifier for granting an exclusive, fully-paid, royalty-free, perpetual, irrevocable, worldwide, sublicensable licence for trademarks Defendants present assertion are incredibly valuable. Indeed, portion the Foundation has failed to ever disclose to the IRS its ownership of the trademarks oregon beingness of the exclusive royalty-free licence to Automattic, for the past 7 years Mullenweg himself executed the IRS forms connected behalf of the Foundation nether penalties of perjury, an evident mendacious certification to the IRS and nationalist that the Foundation’s Forms 990 were true, correct, and complete.”

Additionally, the suit shows that successful 2011 Mullenweg filed IRS forms claiming that the non-profit WordPress Foundation lone had assets of $14,071 and made nary notation of assets similar trademarks oregon different IP (intellectual property).

False Statements About Trademark Ownership

Another of the accusations made successful the lawsuits is that Mullenweg had made misleading nationalist statements asserting that the trademarks had been transferred to the non-profit WordPress foundation, adjacent though helium had secretly transferred the trademark backmost to Automattic done an exclusive sublicensable license. A sublicensable licence is an statement successful which the archetypal licence holder (the licensor) grants a 2nd enactment (the licensee) the close to assistance a licence to a 3rd enactment (the sublicensee).

The suit states:

“In 2010, successful effect to mounting nationalist concern, the WordPress root codification and trademarks were placed into the nonprofit WordPress Foundation (which Mullenweg created), with Mullenweg and Automattic making sweeping promises of unfastened entree for all: “Automattic has transferred the WordPress trademark to the WordPress Foundation, the nonprofit dedicated to promoting and ensuring entree to WordPress and related unfastened root projects successful perpetuity. This means that the astir cardinal portion of WordPress’s identity, its name, is present afloat autarkic from immoderate company.” Mullenweg and Automattic reiterated this committedness later, successful adjacent much forceful terms: ‘What’s important is that [] longer than I’m alive, longer than Automattic is alive, longer than immoderate of america are alive, determination is thing that holds the WordPress codification and trademark for the escaped entree for the world.”

What Defendants’ statements and assurances did not disclose is that portion they were publically touting their purported bully deed of moving this intelligence spot distant from a backstage company, and into the harmless hands of a nonprofit, Defendants successful information had softly transferred irrevocable, exclusive, royalty-free rights successful the WordPress trademarks close backmost to Automattic that precise aforesaid time successful 2010. This meant that acold from being “independent of immoderate company” arsenic Defendants had promised, power implicit the WordPress trademarks efficaciously ne'er near Automattic’s hands. “

WP Engine writes that it relied connected the promises made erstwhile it was founded successful 2010 arsenic a concern built astir WordPress, investing hundreds of millions of dollars implicit the past 14 years lone to spot WordPress turned against it by the “petulant whims” of Automattic’s CEO, Matt Mullenweg to “inflict harm” to WP Engine’s business.

Further claims are made that the petition for outgo of tens of millions of dollars for a trademark licence (that WPE claims is not needed) came “without warning” and that they were fixed lone 48 hours to marque the determination to wage oregon look being banned and “publicly smeared.”

Alleges Mullenweg Controls WordPress Foundation For Self-Interest

The suit besides claims that the caller events astatine WordCamp and the days thereafter exposes that the non-profit WordPress Foundation is an entity that Mullenweg personally controls for his ain and Automattic’s commercialized interest.

“Mullenweg’s caller actions person exposed and highlighted his agelong past of obfuscating the existent facts astir his power and manipulation of the WordPress Foundation and wordpress.org—which helium presents arsenic a not-for-profit ‘dot-org’ enterprise, but which successful information helium solely owns and directs with an robust fist to further his ain commercialized interests successful Automattic and associated commercialized businesses, to the detriment of Defendants’ competitors.”

Fallout From Lawsuit

The suit was filed October 2nd and determination is already a credible study that the WordPress Executive Director/General Manager, Open Source Division; Automattic, Josepha Haden Chomphosy, has resigned and volition beryllium making an announcement contiguous October 3rd. The connection astir this was posted connected X by WP Tavern writer Jeff Chandler who has been progressive with WordPress since 2007.

He tweeted:

“I spoke with Josepha tonight. I tin corroborate that she’s nary longer astatine Automattic.

She’s moving connected a connection for the community. She’s successful bully spirits contempt the turmoil.”

I spoke with Josepha tonight. I tin corroborate that she’s nary longer astatine Automattic.

She’s moving connected a connection for the community. She’s successful bully spirits contempt the turmoil.

— Jeff (@jeffr0) October 3, 2024

Read the 98 leafage national suit here: (PDF)

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