A Washington University professor is suing mobile payments startup Square for fraud and patent infringement, claiming that he should be included as one of the company’s co-founders, the St. Louis Post-Dispatch reports.
Square, founded by Twitter’s Jack Dorsey and a former owner of a glass-blowing business, Jim McKelvey, makes a credit card-swiping attachment for cell phones and tablets.
The legal battle over the patent on that card reader is tangled and has been going on for several years.
McKelvey told the Post-Dispatch last year that he thought up the idea for the card reader in 2009 and contacted his friend Dorsey to help develop it. He then contacted Prof. Richard Morley, who holds patents on several card-reading technologies, to help develop a prototype.
In December 2010, Square and its co-founders filed a lawsuit against Morley’s company, REM Holdings 3, claiming that McKelvey was wrongly left off a new patent for the developed card reader device. Counterclaims followed and encompassed several patents. That lawsuit is still pending.
The new suit Morley filed Thursday against Square however, says that Morley alone invented the card reader and the magnetic stripe decoding algorithms on Square’s app. Morley’s attorney also said that that Morley helped the company on the business side by explaining the way credit cards are processed.
“Mr. Dorsey and Mr. McKelvey conspired with the objective of owning the lion’s share of the company and excluding Dr. Morley from receiving his share as a co-founder,” the lawsuit alleges. Essentially, Morley is claiming that he was ousted.
The accusation is unfortunate because Dorsey was previously accused of helping oust alleged co-founder Noah Glass from Twitter during that company’s early years.
Amid speculation of an IPO later this year, Square responded with plans to vigorously fight the lawsuit.
Morley is seeking an unspecified amount of damages.