Digital Transactions Authoritative, insightful and timely information for payments professionals
(This story has been updated to include a statement from Square).
Square Inc. is often seen as the exemplar of technology that lets small merchants process card transactions via a simple reader linked to a mobile device. But now a rival point-of-sale technology provider has sued Square alleging that the San Francisco-based company infringed a collection of patents to establish that business.
The lawsuit by Fresno, Calif.-based AnywhereCommerce Inc., filed July 26 in a California federal court and announced Wednesday, accuses Square of “willful, wanton, and deliberate” infringement and asks the court for treble damages. It also asks the court to order Square to cease the alleged infringement. In response, Square argues the case has no merit. “Square respects valid intellectual property rights of others, but will defend itself vigorously against baseless suits such as this one,” says a company spokesperson in an emailed statement.
The patents at issue cover a method for processing transactions by connecting a card reader to a communication device such as a smart phone or tablet. They include U.S. Patent No. 8281998, which contains 22 claims and is entitled “apparatus and method for commercial transactions using a communication device” and granted by the U.S. Patent and Trademark Office in October 2012. AnywhereCommerce argues a patent granted later to Square cofounder and chief executive Jack Dorsey “ironically” cited 8281998 as prior art.
Another patent with the same heading, No. 8286875, with 31 claims, began with an application filed June 16, 2011 and was granted on Oct. 16, 2012.
AnywhereCommerce says it approached Square in January hoping to reach a settlement without the need for litigation, but was apparently unsuccessful. Now, the company says it will be prepared to sue other companies it views as infringing its intellectual property. “We are taking legal action against Square and we will take legal action against other infringing entities. Our lawsuit against Square is the first domino to fall as we enforce our patent rights against any and all infringers,” says Oliver Griffin, a partner at Kutak Rock, the law firm representing AnywhereCommerce, in a statement.
AnywhereCommerce has not been shy about taking legal action in business matters. In December, it filed suit in federal court in Atlanta alleging another rival, Ingenico Group SA, interfered with its contracts and business relationships and stole trade secrets.
Infringement cases such as the one against Square have been brewing for years. Mitchell Cobrin, a founder of 13-year-old Anywhere Commerce, told Digital Transactions News in 2012 the company would vigorously defend its newly won patents. “There’s a lot of people in the industry who are infringing on our patents,” he said at the time. “Our plan is to preserve all our legal remedies and protect our intellectual property. We spent a lot of time and money to get to this point.”
In its announcement Wednesday, AnywhereCommerce said it has sold “millions” of card readers in 15 countries, “despite” alleged infringement.
