When it rains … WD has to pay $525M to Seagate in trade-secret theft settlement

When it rains, it pours for hard disk maker WD. Already hit by floods in Thailand that have hobbled production of hard drives, WD has now been hit with an arbitration court decision ordering it to pay $525 million to Seagate.

WD will no doubt appeal the decision, made by an arbitrator in a case in Minnesota. The suit alleges misuse of confidential information including trade secrets involving a former Seagate employee.

WD CEO John Coyne has issued a terse statement: “We do not believe there is any basis in law or fact for the damage award of the arbitrator. We believe the company acted properly at all times and we will vigorously challenge the award.”

He added, “This does not affect our ability to conduct our operations, to complete the recovery and recommencement of our Thailand operations or, subject to obtaining the required regulatory approvals, to consummate our planned acquisition of Hitachi GST.”

Seagate filed a complaint in the case in October, 2006, alleging trade secret theft. WD asked for the arbitration in June, 2007. WD is in the midst of buying Hitachi GST’s storage business and is proceeding with reopening its factories in Thailand.

[picture credit caramon]