Lawsuit says professor was swiped out of Square patent, success

In the beginning, there was… well, choose your own creation story.

In the latest challenge to a high-profile tech company’s beginnings, a professor is suing Square, claiming he invented the San Francisco startup’s first big — though tiny in size — product, the white dongle that lets anyone with a smartphone accept credit card payments. Robert E. Morley Jr., a professor at Washington University in St. Louis, also is suing Square co-founders Jack Dorsey and James McKelvey Jr. Morley says in the lawsuit that the three formed a joint venture in 2009, but that he was then kicked out of that partnership.

The lawsuit says Dorsey and McKelvey “sought out Dr. Morely because of his expertise, used and relied on his expertise to create a business… and cut him out of the newly formed Square Inc.” Morely’s expertise, according to the suit, included hardware design, transaction processing, knowledge of magnetic-stripe encoding and more.

Morley is seeking damages, and wants to be listed as an owner of Square patents, as the New York Times Bits blog first reported. The stakes are high: IPO rumors have been circling Square, whose latest reported valuation is $5 billion.

Dorsey, by the way, is also a co-founder of Twitter, whose own origin story is filled with drama. In a recently published book, “Hatching Twitter: A True Story of Money, Power, Friendship, and Betrayal,” New York Times reporter Nick Bilton writes that Dorsey sometimes claimed sole credit for the founding of the microblogging company. (The other founders are Evan Williams, Noah Glass and Biz Stone.) As Brandon Bailey wrote, the book also delves into the power struggles that occurred at the company, which also is based in San Francisco, after all the controversy over its founding.

Other tech companies with contested origins: Facebook. Its “betrayal” story was detailed in “The Facebook Effect” book, which was then turned into “The Social Network,” a movie that made the Winklevoss twins, who won hundreds of millions in a settlement with Facebook, just as famous as Mark Zuckerberg, the company’s CEO. In Facebook’s case, Zuckerberg, Tyler and Cameron Winklevoss, and a third accuser, Divya Narenda, all attended Harvard.

More recently, Snapchat, which was created in Southern California by Stanford students, is dealing with its own creation saga. The maker of the mobile app that lets users exchange self-deleting photos is being sued by Frank “Reggie” Brown IV, who claims Evan Spiegel and Bobby Murphy cut him out of the company. Snapchat is said to 1. be valued at a couple of billion dollars, and 2. to have turned down an acquisition offer from Facebook.

 

Photo: Square’s first commercial product was a tiny white dongle that can be attached to smartphones and used to accept credit card payments. (Courtesy Square via Reuters)

Levi Sumagaysay Levi Sumagaysay (3906 Posts)

Levi Sumagaysay is editor of the combined SiliconBeat and Good Morning Silicon Valley. She also helps take care of SiliconValley.com, the Mercury News tech website. Email: lsumagaysay (at) bayareanewsgroup (dot-com).