Western Digital was ordered to pay $525 million following an arbitration process brought about by a claim from Seagate Technology (News - Alert). Western Digital is expected to challenge the order.

The award relates to Seagate and one employee who was formerly employed by Seagate who claimed there was “misappropriation of confidential information and trade secrets,” according to a Western Digital (News - Alert) press release.

"We do not believe there is any basis in law or fact for the damage award of the arbitrator," John Coyne, president and CEO of Western Digital, said in the press release. "We believe the company acted properly at all times and we will vigorously challenge the award.”

In its analysis of the arbitration award, Reuters quoted an analyst, Kaushik Roy of Merriman Capital, who commented, “it is hard to prove confidential information was misappropriated if an employee joins a competitor.”

In addition, ThinkEquity analyst Rajesh Ghai estimated it could take three months to a year for the issue to be resolved.

The initial legal action was started in 2006 by Seagate in Minnesota courts. The case next went to arbitration in 2007, Reuters (News - Alert) said.

In his statement, Coyne said the arbitration award will not interfere with the company conducting “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 (News - Alert)."

Recent flooding in Thailand led to Western Digital and Toshiba plants there to become “inoperable,” according to a report from TMCnet. Digital Trends reports some 60 percent of Western Digital’s hard drive manufacturing takes place in Thailand, TMCnet adds.

In addition, Western Digital wants to acquire Hitachi (News - Alert) Global Storage Technologies for $3.5 billion in cash and $750 million in Western Digital stock.

Western Digital designs and produces hard drives and solid state drives. In addition, Western Digital’s storage products are marketed to Original Equipment Manufacturers (OEMs), systems manufacturers, selected resellers and retailers, the company said in a press release.