Disk drive maker Seagate Technology LLC dropped its patent infringement lawsuit against Santa Ana’s STEC Inc., a maker of flash memory drives for corporate networks and industrial uses.
Investors sent STEC’s shares up 5% on the news to a recent market value of about $250 million.
In April, Scotts Valley-based Seagate along with its subsidiaries claimed that STEC violated four patents that it registered from 2002 and 2006.
At the time, STEC Chief Executive Manouch Moshayedi said the lawsuit was “frivolous” and that it was designed to put pressure on the smaller rival.
On Thursday, STEC said in a statement that Seagate dropped “all claims associated with STEC’s purported patent infringement.”
“As part of the dismissal, no money was exchanged and neither party licensed its technology to the other,” the company said in a statement.
“We have always maintained that the allegations brought against us by Seagate were without merit,” Moshayedi said.
Seagate didn’t put out a statement of its own. A spokesperson for the company could not be immediately reached.
STEC makes flash memory drives that industry insiders refer to as “solid state” because they have no moving parts. They typically are smaller, more durable and require less electricity to power up and operate.
Seagate is the No. 1 maker of traditional disk drives, which have spinning disks called platters, a needle-like reader and other chips and connecting parts.
It competes directly with Lake Forest-based rival Western Digital Corp., the No. 2 disk drive maker.
STEC is an indirect rival, because it has a corner on the market selling solid state drives for use in storage networks by large corporations and the military.
Solid state drives have taken off for big makers of computers for storage networks, which are used by retailers, banks, companies and the military.
The drives have been viewed as a potential threat to a lucrative part of Seagate’s and Western Digital’s business.
“This is an important development in light of the mass adoption of solid state drives,” said Moshayedi said. “Since STEC plays a major role in the proliferation of solid state drive technology, we view the dismissal as a vindication.”
Seagate’s shares fell 3% on a market value of about $2 billion.
