Final update WordPress developer Automattic on Wednesday published details of its efforts to pressure rival WP Engine to sign a trademark license agreement costing millions of dollars.
As well as contributing to and steering the direction of the open source web publishing system WordPress – used by millions and millions of websites – Automattic also provides commercial hosting of WordPress-based blogs. WP Engine, meanwhile, also sells WordPress hosting, and the pair have been beefing.
Automattic, annoyed at WP Engine using "WP Engine" as a name to do boffo business, likened WP Engine to cancer, and wanted the biz to pay millions of dollars in trademark usage fees to, in Automattic's mind, support the development of WordPress. WP Engine says it shouldn't have to cough up.
Now, pulling back the curtain further on that drama, Automattic has made public a term sheet, which appears to date back to February 2023, that it was trying to get WP Engine to sign that would make the latter pay "a royalty fee" to fund work on the open source WordPress software that both organizations rely on.
The proposed seven-year Trademark License Agreement [PDF] calls for WP Engine to pay eight percent of its gross revenue on a monthly basis to Automattic, or in the form of WordPress software development time contributed by salaried employees, or a combination of the two options.
It also includes a ban on forking software from Automattic, its WooCommerce subsidiary, or its affiliate's software (eg, plugins and extensions) "in a manner that disrupts any partnership between Automattic and its commercial partners."
As an example, the term sheet specifically forbids "changing attribution codes included in any software by Automattic." Attribution codes are metadata in online transactions that let e-commerce merchants understand the effectiveness of marketing campaigns on product orders. Automattic did not provide any details about whether WP Engine is currently doing this.
WordPress software is subject to the GPL-v2 license. WooCommerce is also "fully open source."
Both outfits last week issued dueling cease and desist letters, with Automattic accusing [PDF] WP Engine was violating its trademarks, while WP Engine claiming [PDF] Automattic CEO Matthew Mullenweg was demanding payment and making false, disparaging statements that interfered with its business.
Mullenweg contends that WP Engine, backed by venture capital firm Silver Lake, is profiting from WordPress software without giving back to the project. And based on those claims, Automattic's WordPress.org last week cut off WP Engine's access to its servers, thereby preventing WP Engine customers with WordPress websites from updating their themes and extensions.
On Friday, in the wake of community criticism, Mullenweg – through WordPress.org – announced a three-day reprieve for WP Engine until October 1, 2024, so his rival could stand up its own software update service.
WP Engine did not immediately respond to a request for comment, though the company's status page indicates they've deployed an alternative update server.
What complicates the debate is that Matthew Mullenweg, CEO of Automattic and co-creator of WordPress, is also a director of the non-profit WordPress Foundation, which chiefly oversees the open source project.
Mullenweg also owns WordPress.org personally, which is not the same as the WordPress Foundation. The fact that the term sheet says WordPress.org would direct the work of WP Engine employees if the time-donation payment option were chosen makes it unclear who or what entity would be the actual beneficiary of said work.
And his dual role has led critics to argue that Mullenweg should step down from the foundation due to concerns about conflict of interest. It has also led a petition on the website unprotected.org asking the America's consumer watchdog the FTC to investigate Automattic's business practices.
"It has become common for individuals to establish non-profits to develop open-source software (OSS) using unpaid labor and public contributions," the petition states. "However, they may then leverage their for-profit entity to monopolize and privatize the gains, creating a market imbalance."
The FTC declined to comment.
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In an email, Bruce Perens, one of the founders of the open source movement who drafted the original Open Source Definition, told The Register, "Let's be clear about WP Engine: It's built on WordPress. There would be no business without WordPress. And it's a large business with big revenue, operated as if it's funded by private equity.
WP Engine ... has to increase returns to the investors. What do they do? Cut any voluntary expense, which includes returning any value to the creators of WordPress
"Private equity always demands big returns, regardless of the harm they do to the business. One of my customers has been completely destroyed by them – they are still operating but on such thin resources that they can't dedicate the time of one engineer to work with me on an open source compliance review, even if I do it for free.
"So, WP Engine is in that situation, and has to increase returns to the investors. What do they do? Cut any voluntary expense, which includes returning any value to the creators of WordPress. I'm told that WordPress asked for eight percent of revenue, which sounds fair to me considering that it's the basis of WP Engine's business.
"But because it's an open source project, WordPress can ask but can't demand that money, so they have to turn to hostile enforcement of their trademark and denying access to their updates."
Perens said the situation exemplifies how open source is broken, with some 60 percent of developers being unfunded.
"As you know, I've been working on the Post-Open project, which would make it possible for the developer to demand revenue not only from companies like WP Engine but from their deep-pocketed users," he said.
"As more problems like the WordPress dispute come up, I think people will understand that being able to demand a fair return on their work is essential to continuing the partnership between developers and users fairly, without this sort of dispute."
The Register asked Automattic to elaborate on its concerns about attribution codes, whether WordPress.org has resumed blocking WP Engine, whether Automattic has made a monetary demand to any other WordPress hosting firm, and whether Mullenweg's dual roles as CEO of Automattic and director of the WordPress Foundation represent a conflict of interest.
We'll update this story if we hear back. ®
Updated to add at 0145 UTC, October 3
On Wednesday, WP Engine filed a federal lawsuit [PDF] against Mullenweg and Automattic. The suit alleges attempted extortion, libel, interference with contractual relations, computer fraud and abuse, unfair competition, and more.
In a statement to The Register, a WP Engine spokesperson summarized the suit's claims, thus:
Final update at 2200 UTC, October 3
On Thursday, Neal Katyal, former Acting Solicitor General of the United States and Automattic’s attorney in this case, said WP Engine’s lawsuit is “meritless.”