Square Stuck in Patent Hell

Mobile credit card payment startup Square, whose card reading service works with a nifty magnetic card reader that plus into a mobile device’s headphone jack, is missing a very important piece: The patent for the hardware.

Square, Inc. and founder Jim McKelvey filed a complaint against Robert Morley, Jr., an associate professor of electrical engineering at Washington University, claiming that he neglected to list McKelvey as co-inventor of the device.

According to the story told McKelvey, a glass artist and entrepreneur, he came up with the idea for a mobile card reader in 2009 after losing a sale because he couldn’t accept credit card payments. He then teamed up with friend and Twitter co-founder Jack Dorsey, and they decided to use a mobile phone’s headphone jack as a way of interfacing with a card reading device. McKelvey then turned to friend Morley to help design the prototype hardware.

The three reportedly had discussed obtaining a patent once the prototype was finished, but Morley filed solo in June 2009, and a patent in his name for the card reader device was granted on October 12, 2010.   Square and McKelvey are requesting that the court add McKelvey to the patent as a co-inventor with Morley. A year ago Morley spoke with VentureBeat, saying that he came up with the concept, designed, and built the hardware on his own. He also said that he would be interested in licensing the technology to other businesses.

The complaint document has been posted online by TechCrunch:

Complaint _5_