On Thursday afternoon, payments company Square issued an earnings report, an announcement that revealed an interesting tidbit of news.
The company has settled an ongoing lawsuit brought about by Robert Morley for a whopping $50 million. Morley claims to have invented the Square credit card reader.
Morley initially sued Square (SQ) and its co-founders Jack Dorsey and James McKelvey in early 2014, alleging patent infringement and breach of fiduciary duty. The college professor claims that he, Dorsey, and McKelvey worked together in 2009 to figure out how to accept credit card payments through a mobile phone. Morley then alleged that he actually invented the hardware device that Square went on to use as its credit card reader. Dorsey and McKelvey then took that information and created Square, according to Morley, and cut him out of any ownership stake of the company.
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Square settled the lawsuit with Morley, and paid him $50 million in cash for his work.
“We also accrued $50 million in general and administrative expenses in the first quarter of 2016 in connection with the Morley litigation,” the company stated in its earnings release. “We recently signed a binding term sheet with the plaintiffs stipulating the material terms of a settlement.”
Square declined to comment on the settlement for this story.
Unfortunately the $50 million took a hit on Square’s earnings, which missed on analyst expectations. For the first quarter 2016, the company’s took a loss of $97 million, compared to a loss of $46.3 million in the same quarter a year ago. Square saw revenue jump over 50% to $379 million.
Square declined to comment on the settlement for this story.
