Lawsuit claims professor cut out of Square's original patent

The suit, filed by St. Louis professor Robert Morley, says he came up with the mobile payment company's basic concept and technology. The legal dispute has been going on for several years.

Daniel Terdiman Former Senior Writer / News
Daniel Terdiman is a senior writer at CNET News covering Twitter, Net culture, and everything in between.
Daniel Terdiman
2 min read
A new lawsuit was filed over ownership of the technology at the core of mobile payments company Square. Square

A St. Louis professor has sued mobile payments company Square, arguing that he originally came up with the concept and first technology for a credit card-reading dongle, yet was denied any formal credit or equity.

In the lawsuit, which was first reported by The New York Times, Washington University professor Robert Morley said that he came up with Square's signature product, the dongle that allows almost anyone with a smartphone or tablet to take credit card payments, as well as developed the first version of the technology. Morley also said he was denied founder's credit or any equity in Square.

Professor Robert Morley Washington University in St. Louis

The suit was filed Thursday in federal court in St. Louis against Square's official founders, Jack Dorsey and Jim McKelvey, claiming patent infringement and breach of fiduciary duty. But this is not the first time that Morley and Square have gone head-to-head over the invention of the company's core technology. Morley first began pursuing his claims in 2009. And Square sued Morley in 2010, arguing that McKelvey had been left off the patent that led to the creation of the company.

In his new suit, Morley is withering in his accusation that Square's official origin story is untrue. "The publicized origin story of Square, Inc. is a fabrication," Morley's suit begins. "The business now known as Square was not created solely by Jack Dorsey and James McKelvey. It was Professor Robert Morley -- and Dr. Morley alone -- who invented the Square card reader, and Dr. Morley co-invented the corresponding magnetic stripe decoding algorithms of the Square app."

The complaint goes on to cite Morley's decade-plus of experience in the credit card industry, and a joint venture between the professor, Dorsey -- also a co-founder of Twitter -- and McKelvey "with the goal of entering the mobile credit card transaction industry using Dr. Morley's invention." He adds that later, Dorsey and McKelvey abandoned that partnership and incorporated Square on their own.

In a statement provided to CNET, a Square spokesperson said, "It's not surprising that Morley would file another desperate, baseless patent lawsuit given how poorly his initial claims have been received by the patent authorities. We will fight it vigorously."

Square recently announced the newest version of the card-reading dongle, one that is thinner and more reliable than any it had previously produced.