Square, the iPhone-friendly payment system launched by Twitter’s Jack Dorsey, could be in a bit of trouble. It seems someone else owns the patent to the technology that Square will rely on. Will the portable payment service survive its patent problem?
Bob Morley, an electrical engineering professor at Washington University and family friend of Square’s co-founder Jim McKelvey, built the prototype for the audio-based credit card reader that has become Square’s current device.
The original payment device looked very different to Square’s current design but the key technologies covered in the patent are largely the same – a magnetic reader that converts the data into an audio signal.
It appears that Square’s founders had a disagreement with Morley. But he filed the patent for the card reader in June and it is in his name. It’s likely to be granted and means that Morley and not Square would own the technology which it hopes to rely on.
Morley apparently wanted shares in Squre in return for giving the company ownership of the patent. An agreement couldn’t be reached. Now Square faces this situation: it can launch its service regardless but could face a future filled with licensing payments to Morley or a pressing need to pay him a substantial sum to buy the patent.
With Apple among its potential competitors, Square needs to come up with a solution quickly.
Out now | £free | Square (via Fast Company)
