Seagate has been awarded US$525 million in arbitration in connection with a trade secrets case against Western Digital, which said it would challenge the ruling.
Seagate alleged that Western Digital and a former Seagate employee misappropriated confidential information and trade secrets. The arbitration ruling was rendered in Minnesota, and the award will also include prejudgment interest, which has yet to be determined.
Western Digital said it would challenge the arbitration ruling as there is no legal basis to it.
"We believe the company acted properly at all times and we will vigorously challenge the award," said John Coyne, Western Digital CEO, in a statement. The ruling will not hurt the company's ongoing operations, which have been disrupted by the flooding in Thailand.
Seagate and Western Digital did not return requests for comment.
Seagate and Western Digital are the top two hard-drive vendors in the market, according to market research firm IHS iSuppli. Western Digital held a 32 percent market share in worldwide hard drive unit shipments during the second quarter this year, while Seagate held a 31 percent share, according to iSuppli.
The companies are also snapping up competitors as the hard-drive market contracts. Western Digital in March agreed to acquire Hitachi's hard drive business for $4.3 billion, which is undergoing regulatory approvals. Competitor Seagate in April agreed to buy Samsung's hard drive business for $1.38 billion, which has been approved by the European Union.