WP Engine had their day in court, but it didn’t go entirely in their favor, as Judge Araceli Martínez-Olguín ruled the request for a preliminary injunction was too vague. However, the judge said they were “inclined to grant some sort of injunction.”
An attorney who live blogged the hearing on Bluesky noted that the judge wasn’t up on the technical but commended her for asking a lot of questions.
“That’s How You Set A Ransom”
The attorney for plaintiff offered new details about what happened behind the scenes on the day that Matt Mullenweg went “nuclear” on WP Engine at WordCamp USA. She first explained that Mullenweg’s demand for trademark license was a sham. Then showed how Mullenweg failed to enforce his trademark claim for fifteen years.
Among the new details was that Mullenweg’s demand for $32 million dollars was communicated in a one-page letter and that the agreement was for a seven year period that automatically renews “essentially forever.” She then revealed new details of how Mullenweg decided on the $32 million dollars, explaining that it was just “a number” that Mullenweg felt WP Engine was able to pay.
The point of this part of the plaintiff’s argument was to show that the royalty rate that Mullenweg was asking for was not based on any value of the mark but rather the rate was a figure that Mullenweg felt he was able to squeeze out of WP Engine, saying that the rate was “set in an extortionate manner.”
WP Engine’s attorney offered this narrative of events:
“We know that defendants had no right to offer that, quote unquote, service because it is a pretext. It is a sham. …You look at the record. We see that for 15 years, WP Engine was making nominative fair use of the WordPress mark as the entire community did for 15 years without so much as a shoulder tap. ‘Excuse me.’ ‘Here’s an email.’ ‘Here’s a text.’ ‘Here’s a cease and desist letter.’ Nothing.
Nothing whatsoever, until the morning of September 20th when we receive this one page bizarre trademark license agreement. That’s not how trademark owners operate. That is not how you protect and enforce your mark. You don’t wait 15 years and then drop a demand for thirty two million dollars on the recipient.
We also know from the price set, …this one page license listed a price of eight percent of WP Engines gross revenues, which happens to amount to thirty two million dollars. And it set that price for a seven year period to automatically renew essentially forever.
And when asked, how did you set that price? Mr. Mullenweg, defendant Matthew Mullenweg, acknowledged, “it’s what I thought they could pay. We did an analysis to figure out what the free cash flow was. That’s how we set that number.” That’s not how you calculate a royalty. That’s how you set a ransom.”
Judge Questioned WP Engine’s Attorneys
There was a point in the proceedings where the Judge Araceli Martínez-Olguín asked WP Engine’s attorneys what right to continued acces did they have without paying any kind of license.
WP Engine’s attorney answered:
“So there’s just simply no connection there, your Honor, whatsoever. The test is not: does WP Engine have a right to be free from a trademark license?”
The attorney also pointed out that free access to WordPress.org was the “status quo” for fifteen years, which changed on September 20th when Mullenweg initiated his dispute with WP Engine.
Automattic’s Defense Tactic
The attorney for Automattic and Mullenweg argued several technical points as to why the judge should not grant an injunction. One key point was that WP Engine’s extortion claim, under California law, fails because California courts do not recognize a private cause of action for attempted extortion under the California Penal Code.
They then point out that the case law WP Engine’s attorney is relying on (Tran v. Winn) concerns a different legal concept (duress and rescission) rather than extortion. They said that the plaintiff’s legal theory doesn’t match extortion claims and involves different legal principles.
Automattic’s attorney then follows that up by stating that even if WP Engine could use the Tran v. Winn case law, the plaintiff’s argument still fails under the other case law they are citing to base their claims on (Levitt case). They argue that the plaintiff cannot meet the legal standard for economic extortion because they are unable to show that the defendant had no right to demand payment for the services in question.
An argument made by Automattic’s attorney about the trademark license demand is that the plaintiffs omit a second option in the license, which was to provide volunteer hours equivalent to the payment. Shaw also pointed out that Mullenweg had made a reference to negotiating the terms the following week, but WP Engine never responded to his message.
The attorney said: