The Strategic Use of Public Conflict: How Wordpress Turned a Trademark Dispute into a $32 Million Power Play

A Blueprint for Brand Control

Automattic, the company behind WordPress, is engaged in a high-stakes legal battle with WP Engine over the unauthorized use of the WordPress trademark. The conflict has become a strategic display of brand protection, financial leverage, and public relations. This article examines why Automattic chose this moment to take legal action, the $32 million annual licensing demand, and the implications for the wider WordPress ecosystem.

Why Conflict and Why Now?

Automattic’s decision to pursue legal action now is no coincidence. WP Engine, a managed WordPress hosting provider, has been growing steadily, with its revenue largely reliant on the WordPress ecosystem. Automattic waited until WP Engine reached a significant size, where legal action would yield a substantial financial reward. The company’s strategic timing is about maximizing leverage, as WP Engine has become heavily dependent on the WordPress brand to attract customers. By taking action now, Automattic is positioned to claim more significant damages than it would have if the conflict had occurred earlier.

Automattic has filed various press releases detailing the dispute. In one, Automattic reiterated its commitment to protecting its brand and intellectual property, highlighting how WP Engine has been using the WordPress name without proper licensing. Automattic is keen to remind the public that while WordPress is open-source software, the WordPress trademark is strictly controlled by the company. According to U.S. Trademark Registration No. 3201424, filed in March 2006 and registered in January 2007, the WordPress name is protected for software and related services under classes 9 and 42.

The $32 Million Licensing Demand: Anchoring the Negotiation

Automattic’s $32 million licensing fee demand from WP Engine is a strategic anchor in the negotiation process. This figure, representing approximately 8% of WP Engine’s revenue, sets a high baseline for any potential settlement. By starting at such a high figure, Automattic ensures that even if WP Engine negotiates the fee down, Automattic will still benefit substantially from the final agreement.

In negotiation theory, as outlined by Chris Voss in his book Never Split the Difference, anchoring high is a powerful strategy. It forces the other party to negotiate within the boundaries of your terms, increasing the likelihood of a favorable outcome. Automattic has followed this principle to the letter, putting WP Engine in a defensive position from the start.

Furthermore, the court filings and documents, reveal that Automattic is not just focused on future revenue but also on past damages. Automattic is seeking compensation for WP Engine’s historical use of the WordPress brand without a license, which could date back several years, adding to the total amount WP Engine may owe.

Why Going Public Is a Strategic Masterstroke

Automattic’s decision to make this conflict public wasn’t just about legal pressure—it was about market positioning. By taking the conflict into the public sphere, Automattic has effectively put WP Engine on notice and applied external pressure. Now, WP Engine is not only defending itself in court but also in the court of public opinion.

Jeff Bezos, in multiple interviews, has spoken about how he prefers conflict because it forces companies to innovate and protect their territory. In the book Amazon Unbound Jeff Bezos would say, “if I have to choose between agreement and conflict, I will take conflict every time, it always yields a better result.” Automattic’s strategy mirrors this approach. By going public, Automattic sends a message to its partners, competitors, and potential infringers: the WordPress brand is fiercely protected, and unauthorized use will not be tolerated.

Public pressure also accelerates conflict resolution. WP Engine now has to contend with its reputation, customers, and investors watching closely. Any delay in resolving the issue could lead to negative consequences for WP Engine, making a swift settlement more likely. Automattic, meanwhile, controls the narrative by positioning itself as the protector of its intellectual property.

The Role of Timing in Negotiation

Automattic’s decision to act now highlights the importance of timing in negotiations. By waiting for WP Engine to grow, Automattic ensured that its legal action would have maximum impact. Timing also played a role in Automattic’s decision to go public. WP Engine’s reliance on the WordPress brand had reached a point where the stakes were too high for them to ignore the dispute or risk long-term legal battles.

This strategy of waiting until leverage is at its peak aligns with successful conflict-resolution tactics used by major companies across industries. In trademark disputes, companies like Nike and Apple have historically waited until infringement posed a significant financial threat before engaging in legal action. Automattic has similarly chosen its moment carefully, striking when WP Engine is most vulnerable.

Long-Term Brand Control and Conflict as Growth

Automattic’s legal action against WP Engine is not just about recouping lost licensing fees—it’s about long-term brand control. By taking this aggressive stance, Automattic is asserting its ownership of the WordPress brand and ensuring that any company using the WordPress name must comply with licensing terms.

This conflict serves as a warning to other companies in the WordPress ecosystem. Automattic’s clear message is that while the software may be open-source, the name is not. By taking on a major player like WP Engine, Automattic solidifies its leadership role in the WordPress community, ensuring that it remains at the center of its ecosystem’s growth.

As Bezos mentioned, conflict can act as a catalyst for growth by forcing companies to clarify their mission and boundaries. Automattic’s public defense of the WordPress trademark will likely yield future benefits in the form of increased licensing deals, partnerships, and brand loyalty.

The Likely Outcome and Lessons from the Conflict

Given Automattic’s strong legal position and their calculated use of public conflict, it’s likely that WP Engine will be forced to settle. The company will likely agree to a substantial licensing fee, though it may not reach the $32 million Automattic initially demanded. Automattic’s use of strategic anchoring, public pressure, and precise timing has put WP Engine in a reactive position with few options but to negotiate.

This conflict demonstrates the importance of timing, leverage, and public relations in high-stakes legal battles. Automattic’s willingness to engage in conflict has not only bolstered their control over the WordPress brand but also set a precedent for other companies that may be tempted to use the WordPress name without proper licensing. As a result, Automattic’s legal actions will likely lead to stronger, more lucrative licensing agreements in the future, further solidifying its dominance in the open-source space.