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WD escapes $630m hit over Seagate 'trade secrets' ... for now anyway

Lot more secrets in a hard drive than you thought

Internet Security Threat Report 2014

Western Digital is off the hook for a cool $630m in an arbitration case it initially lost over the alleged misuse of Seagate's confidential information, including trade secrets.

Back last year, Seagate complained about the activities of WD and a former Seagate employee who had joined WD, alleging that WD was using Seagate trade secrets and other confidential information in its activities. The dispute went to an arbitration court, which awarded Seagate $525m in damages in November 2011. There are more details here.

But WD denied the validity of the claim and went back to the arbitration court. Now the award is worth $630m and, as reported by various media outlets using Reuters' data, the court has "vacated in full... the award". But three out of the eight allegations of misuse of trade secrets were still in dispute, the court said, so WD might well end up paying quite a bit:

On October 12, 2012, the District Court of Hennepin County, Minnesota (the "Court") vacated, in full, the $630.4 million final arbitration award previously issued against Western Digital Corporation (the "Company") in the arbitration between the Company and Seagate Technology, LLC ("Seagate") that concluded on January 23, 2012.

In the arbitration, Seagate alleged, among other things, misappropriation of eight alleged trade secrets by the Company and a now former employee.

The Court confirmed the arbitration award with respect to each of the five trade secret claims that Western Digital and the former employee had won at the arbitration, and vacated the arbitration award with respect to the three trade secret claims that Western Digital and the former employee had lost.

The Court ordered that a rehearing be held concerning those three alleged trade secrets before a new arbitrator agreed upon by the parties and that if by November 2, 2012 the parties are unable to reach agreement, then the Court will appoint a new arbitrator.

So WD has won a new hearing with a time limit just over two weeks from now. Will it have to pay anything at all regarding the three outstanding claims to Seagate? Will the new arbitrator set an even higher damages amount? Tune in to Radio Reg Storage to find out in a few days' time. ®

Internet Security Threat Report 2014

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