Western Digital to pay Seagate $525 million following arbitration

A 5-year-old lawsuit brought by hard disk drive manufacturer Seagate against rival Western Digital was settled out of court on Monday. Seagate announced that an arbitrator has granted the company the go-ahead to collect $525 million in compensatory damages from Western Digital, plus an additional undetermined interest fee.

Western Digital to pay Seagate 5 million following arbitration

Seagate accused an ex-employee who jumped ship to Western Digital in 2006 of sharing top secret company information with his new employer, constituting a breach of contract.

The case isn’t over yet, said Western Digital. In a press statement released on Sunday, Western Digital CEO John Coyne objected vigorously to the arbitration results and questioned their legal standing.

“We do not believe there is any basis in law or fact for the damage award of the arbitrator,” said Coyne. “We believe the company acted properly at all times and we will vigorously challenge the award.”

Coyne denied that the case would affect the company’s present priorities, which include the pending acquisition of Hitachi GST and pushing the company back up to speed following a disastrous Thailand flood season. Both Western Digital and Seagate saw plants crippled by flood waters, though the former was hit much harder.

Fourth quarter HDD shipment figures from Western Digital are expected to drop more than half. Seagate’s comparatively minor losses mean it will become the market leader by default.

The floods shook up more than the market leaderboard. HDD price tags have increased dramatically in the past few weeks – way beyond the modest 10 percent average research group IHS estimated.

A CNET report found prices had skyrocketed over 100 percent in retail channels. Insider news site DigiTimes speculated that that trend could reverse itself as early as December. (via Seagate and Western Digital)