Evan Schuman's StorefrontBacktalk

Chervitz did—but only Morley’s name appeared on the application and the patent, #7,810,729, when it was issued. McKelvey says he just wants his name, and that of Square, on the patent.

Got all that so far?

Morley, the engineering professor, remembers things differently. He says McKelvey came to him with the idea of using a phone’s camera to read a payment card, and it was Morley who suggested reading the mag-stripe. According to Morley’s countersuit, “McKelvey indicated that he did not know how to do that. Dr. Morley said that he did, and he would show that it could work and McKelvey asked Dr. Morley to do so. Dr. Morley also indicated at the meeting that he could make a small credit card reader to plug into the external microphone input (audio output port) of a cell phone, such as an iPhone.”

Morley says he was the one who built the prototypes (with help from McKelvey “at the direction and control of Dr. Morley,” his countersuit says), created the circuitry and invented the reader. He also says that the lawyer, Chervitz, has always been his patent attorney, and McKelvey never paid for any of Chervitz’s legal work. That’s why, Morley says, only his name is on the patent. If Square wants to use it, the vendor will have to cut a deal with him.

Then there’s the lawyer who’s representing Morley in the lawsuit—his patent lawyer, David Chervitz.

Wait, you can’t do that, said a lawyer for McKelvey in a letter to Chervitz. You’ll be a witness in this lawsuit. Besides, you’ve previously represented McKelvey—that’s a conflict of interest.

Chervitz’s reply: “At all times my client was and has been Robert E. Morley, Jr. Further, I do not recall my invoice dated June 15, 2009, being paid by James McKelvey [and] it does not appear that I am a necessary witness to the question of inventorship.”

McKelvey’s lawyer then sent Chervitz a copy of Chervitz’s invoice with McKelvey’s name on it as client, and a canceled check from McKelvey with Chervitz’s signature on the back—and pointed out that there were also multiple E-mails between Chervitz and McKelvey discussing the patent application. Chervitz didn’t budge, and last Thursday (Jan. 20), McKelvey’s lawyers filed papers to force Chervitz off the case. (We’d tell you what was in them, but most were sealed because they included attorney-client communications.)

That’s the soap opera to date—and no one has even faced a judge yet.

It’s easy to understand why McKelvey, as a co-founder of Square, wants his name on the patent—and why Morley, who doesn’t own a piece of Square but would like to, wants sole ownership. It’s harder to figure out why no one involved can tell a story that remotely agrees with anyone else’s—including the lawyer who can’t remember cashing checks or who his clients are.

And that isn’t likely to make any retailer, big or small, feel more comfortable with Square.