Square Heads To Court Over Patent Problems

According to its website, the digital payment company Square was created when its current chairman, Jim McKelvey, couldn’t sell a piece of his hand-blown glass because he couldn’t accept credit cards. This inspired him to create a new type of credit card reader.

But now TechCrunch’s Robin Wauters is reporting that Mr. McKelvey’s name doesn’t appear as an inventor on a patent crucial to Square entitled, “Card reader device for a cell phone and method of use.”

The name on the patent? Well, it’s complicated. According to the lawsuit,

In or about February 2009, Mr. McKelvey contacted his friend of 20 years, Mr. Robert Morley, Jr., to help build a prototype magnetic card reader that could be plugged into a cell phone input jack. Mr. Morley, a professor at Washington University, had previous experience working with magnetic card readers.

Over a period of several days, working in Mr. McKelvey’s glass studio and Mr. Morley’s laboratory at Washington University, Mr. McKelvey and Mr. Morley exchanged ideas regarding the design of the prototype card reader.”

Morley and a patent attorney, David Chervitz, looked into prior art and filed the patent, allegedly with financial backing from Mr. McKelvey. But only Morley’s name appears on the patent. Square’s lawyers are arguing that Mr. McKelvey’s name was omitted in error, and should be added to the patent.

Square Heads To Court Over Patent Problems