I can't locate my reference at the moment Ewan but the patch with the stitched sides was worn that way (stitched onto the shirt as a full square) for a time. Let me have a dig through my stuff and I'll see if I can find the reference. It wasn't the patch for
Oberbann 1 at that time though as the Oberbann system had been abolished by then.
Edit: The 'Organisationsbuch der NSDAP' for 1936, 37 and 38 show that the patch was worn this way by all DJ from DJ boy up to and including Stammführer (1936 and 37) and Oberjungstammführer (1938). Ranks above that had special rune patches denoting their rank. I do remember reading a source which stated that the square patch was only worn by those with a rank but I can't put my finger on exactly where I read that.
Although the 'Organisationsbuch der NSDAP' for 1938 still shows the patch in this configuration I have a further reference from 'Vorschrift über den Jungvolkdienst' dated 1.2.1938 which says 'the rune patch is to be sewn on to the shirt such that the brown material cannot be seen' so 1938 would seem to be the year when the patch reverted to the more common round configuration.
Here's a photo (dated 1938) I have showing the square patch in wear:
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