Orange County Business Journal

Court Vacates $630M Arbitration Award Against Western Digital

Chris Casacchia Monday, October 15, 2012

A Minnesota court has vacated a $630.4 million judgment that had been leveled against Western Digital Corp. after a rival accued the Irvine-based disk drive maker of “misappropriation of confidential information and trade secrets.”

The District Court of Hennepin County, Minnesota, on Oct. 12 vacated the arbitration award that had been issued in January against Western Digital brought by Cupertino-based Seagate Technologies LLC.

Seagate had alleged misappropriation of eight trade secrets by the company and a former employee.

The court confirmed arbitration awards in five trade secret claims that Western Digital and the former employee won at arbitration, and vacated the arbitration award in three trade secret claims that Western Digital and the former employee lost.

The court ordered another hearing regarding the three alleged trade secrets before a new arbitrator, which must be agreed upon by the parties by Nov. 2. If they are unable to reach an agreement, then the court will appoint a new arbitrator.

A faster-than-expected recovery in flood-damaged Thailand, and added sales from its $4.3 billion March buy of Hitachi Global Storage Technologies Ltd., helped Western Digital recapture the crown in unit shipments and narrowly surpass Seagate in total sales on its way to posting record earnings in the June quarter, the end of its fiscal year.

Hard-disk drives use spinning disks to store and allow access to data.

Western Digital’s disk drives go into computers, external storage devices, corporate networks and consumer electronics such as DVR players.

Western Digital shares were down 1.2% in afternoon trading on Monday for a market value of about $8.8 billion.