Judge Inclined To Grant Preliminary Injunction

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.”

“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:

“…there is a text from Mr. Mullenweg in which he says, or he makes reference to even negotiating the terms the following week. They just never responded to Mr. Mullenweg’s response.”

What The Judge Said

Judge Araceli Martínez-Olguín had a lot to untangle, with perhaps the main thing being that WP Engine’s injunction was too vague.

The judge gave an indication of what direction she was leaning but also explained that the request was a “non-starter.”

“Having reviewed everything, I am inclined to grant some sort of injunction. Here’s the problem that I have with your proposed injunction, though. This is a nonstarter because it is exceedingly vague.”

The judge then encouraged the parties to work together to narrow down the preliminary injunction to something that isn’t vague and failing that they could submit “dueling submissions.” There was some back and forth about what date to return to court with, with WP Engine asking for a Friday date and eventually agreeing to return on Tuesday, December 3rd.

Reaction To Preliminary Injunction Hearing

A lawyer live blogging the proceedings on Bluesky wrote up their take on what happened:

“I knew that WPE was in very good shape when the opening question was “tell me about your one best shot” because that’s not generally a question you’d ask if you thought nothing had any merit.

I thought that tortious interference was the best shot. I’m pretty sure WordPress’s lawyers did too.”

And followed up with:

“I was reasonably sure that this was leaning toward a grant on the PI. I think that Automattic was close to getting their alternative, but Mack may have saved things with his tech walk through.”

He offered a good opinion about the judge, saying that she appears to recognize that some of the technical issues are outside of her area of expertise and that she expressed a willingness to ask questions to better understand.

He offered his opinion about the judge and the final outcome:

“It’s clear that the Judge isn’t overly technical in her background, but is aware of that and is willing to listen attentively – this is very good, and not a universal federal judge trait.

It will be interesting to see what we get on Monday.

Almost certainly, dueling proposals.”

This summary of what happened in court is based on a live blog and a post on Bluesky by a lawyer of the proceedings over Zoom.

Featured Image by Shutterstock/Jidvg