a) the nonprofit owns a trademark
b) gave an exclusive license with right to sublicense to a for-profit
c) which appears to be run by the same person
d) who is demanding of a competitor to sublicense the trademark
e) paying the money to the for-profit, not the nonprofit
f) when it's not clear that the competitor is infringing on the trademark in the first place.
The litigation here is not likely to go Wordpress or Automattic's way, I think.
And referring to that transfer as "very above board" makes it sound like you're talking about the same thing as the commenter above when in fact you're talking about different things. Because however gracious you find that decision to be, that's a different subject than whether it's above board to, subsequently commingle those responsibilities. And whether or not you feel it's practical, in some sense, it doesn't seem to have anything to do with anything. Either Automatic has The authority to collect licensing payments on behalf of WordPress or they don't and that should be reflected in a charter or something, somewhere.
I don't think referencing the history of Automatic previously owning the trademark has anything to do with anything in this context.
But a cursory glance at Google results for "Wordpress hosting", "woocommerce hosting", or "managed wordpress hosting" will lead you to hundreds of results from a plethora of web hosting companies that have been doing this, many for more than a decade.
The Wordpress Foundation (that owns the "Wordpress" trademark) has not taken any legal action against any of these companies for precisely the same use it's accusing WPEngine of. A judge could well rule that they have not defended their trademark and this claim holds no water.
A claim I've heard is that the for-profit company has the exclusive commercial license (along with the right to grant sub-licenses).
That sounds about right, and is what's written on the WordPress Foundation's trademark page [1]:
> If you would like to use the WordPress trademark commercially, please contact Automattic, they have the exclusive license. Their only sub-licensee is Newfold.
I read something different [2] while reading up on this whole debacle:
> The WordPress Foundation was launched in January 2010. Automattic transferred the trademarks later that year in September. As part of the transfer, Automattic was granted use of WordPress for WordPress.com, but not for any future domains. Matt was granted a license for WordPress.org and WordPress.net.
I wonder if something changed along the way.
[1] https://wordpressfoundation.org/trademark-policy/
[2] https://wordpress.org/book/2015/11/the-wordpress-foundation/