WP Engine Antitrust Claims Survive as Judge Partially Denies Dismissal
A federal judge kept all four WP Engine antitrust claims alive against Automattic and Matt Mullenweg, while all seven defense counterclaims also survived at least in part.
Updated
The brief
- Judge Araceli Martínez-Olguín allowed all four antitrust claims — monopolization, attempted monopolization, and two illegal tying claims — to proceed.
- All seven of the defendants' counterclaims, including trademark infringement, dilution, false advertising and unfair competition, survived at least in part.
- WP Engine lost its claim that Automattic's threats and computer interference amounted to illegal computer extortion.
U.S. District Judge Araceli Martínez-Olguín has denied Automattic, WooCommerce and Matt Mullenweg's bid to throw out WP Engine's core antitrust claims, allowing all four challenged claims — including monopolization and two illegal tying counts — to move forward in federal court.
The ruling, issued on the defendants' motions to dismiss, split the outcome. WP Engine prevailed on most of the claims the defendants tried to dismiss but failed on its claim that Automattic's threats and computer interference amounted to illegal computer extortion. WP Engine also failed to knock out any of the defendants' counterclaims: all seven survived at least in part.
For marketers and platform-dependent businesses, the decision keeps alive the most consequential legal question in the case: whether control over a dominant open-source ecosystem can be leveraged to punish a commercial competitor.
What WP Engine Won
Judge Martínez-Olguín ruled in WP Engine's favor on six parts of the motions to dismiss:
- All four antitrust claims survived
- Interference claims against WooCommerce survived
- The unfair competition claim against WooCommerce survived
- The trademark non-infringement claim against WooCommerce survived
- WP Engine won a partial dismissal of the defendants' false-advertising counterclaim
- WP Engine won a partial dismissal of several trademark counterclaims
The Antitrust Claims
The monopolization and attempted monopolization claims allege that Automattic and Mullenweg used control over the WordPress ecosystem to gain or maintain market power, restrict competitors, raise costs, and reduce competition. The judge found WP Engine had alleged enough market power, competitive harm, and anticompetitive conduct for those claims to continue.
The two illegal tying claims — one under federal antitrust law, one under California law — allege the defendants used control over access to WordPress.org to pressure users not to affiliate with WP Engine. The judge found WP Engine had plausibly alleged this kind of negative tying, so both claims survived.
Three Claims Against WooCommerce
WP Engine's claims against WooCommerce also survived in full. The company had argued that WP Engine grouped it with the other defendants without identifying conduct specific to WooCommerce. The judge rejected that argument, citing a trademark-related letter sent by counsel representing both WooCommerce and Automattic, and an instance in which a WooCommerce employee solicited a WP Engine customer after WP Engine was blocked from accessing WordPress.org.
The judge concluded: "These allegations do not, then, as WooCommerce contends, fail to "'differentiate allegations against multiple defendants.'"
The unfair competition claim against WooCommerce proceeds alongside the interference claims because it rests on the same underlying conduct. And the judge declined to dismiss WP Engine's declaratory claim that its conduct does not infringe WooCommerce's trademarks, rejecting WooCommerce's argument that the claim is redundant.
The Defendants' Counterclaims Survive
The defendants scored a significant win of their own. The judge allowed all seven of their counterclaims to survive at least in part. The counterclaims accuse WP Engine of trademark infringement and dilution, misleading use of WordPress-related branding, false advertising, and unfair competition.
The seven surviving counts are:
- Count 1: Federal trademark infringement
- Count 2: Federal unfair competition, false designation of origin, and false advertising
- Count 3: Common law trademark infringement
- Count 4: Federal trademark dilution
- Count 5: California trademark dilution
- Count 6: Unfair competition under California's UCL
- Count 7: Common law unfair competition
The judge declined to dismiss them because many of WP Engine's challenges could not be resolved at the motion-to-dismiss stage. "Whether the counterclaims are barred by laches, nominative fair use, or because the WordPress Marks were not famous, are factual issues not suitable for resolution at this stage," the judge wrote. "…WP Engine's resort to the statute of limitations as a basis for dismissal is also unavailing."
WP Engine Responds
A WP Engine spokesperson said in an official statement: "We are gratified by this important ruling allowing our antitrust claims to proceed, finding that we have sufficiently alleged market power, anticompetitive conduct, and market-wide harm to competition – not just harm to WP Engine."
The statement continued: "At its core, this case is about how Automattic and Matt Mullenweg abused their power over the WordPress ecosystem to punish a competitor, suppress competition, increase costs, decrease quality, and undermine the open ecosystem that millions of customers and businesses rely on. We look forward to proving our many claims."
Both sides now head toward discovery and, potentially, trial with substantial legal exposure intact. The outcome will test how far an open-source foundation's steward can go in restricting access to the infrastructure that powers a large share of the commercial web.
Based on Search Engine Journal
Filed under wordpress, wp-engine, automattic, antitrust, woocommerce
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News editor covering industry trends and analytics at Marketing Herald.
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