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WESTERN DIGITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
stipulation from Rembrandt to dismiss the case. Rembrandt appealed the Court's claim construction ruling, and the
Federal Circuit issued a summary affirmance in favor of WD in December 2012. Rembrandt did not appeal this rul-
ing and the case has closed.
On August 1, 2011, plaintiff Guzik Technical Enterprises ("Guzik") filed a complaint in the Northern District
of California against WD and various of its subsidiaries alleging infringement of U.S. Patent Nos. 6,023,145 and
6,785,085, breach of contract and misappropriation of trade secrets. The complaint seeks injunctive relief and
unspecified monetary damages, fees and costs. The patents asserted by Guzik allegedly relate to devices used to test
hard disk drive heads and media. WD has filed counterclaims against Guzik or patent infringement of U.S. Patent
Nos. 5,844,420; 5,640,089; 6,891,696; and 7,480,116. The patents asserted by WD relate to devices and methods
used in the testing of hard disk drive heads and media. WD intends to defend itself vigorously in this matter.
On April 29, 2013, plaintiffs Charles C. Freeney III et al. filed a complaint in the Eastern District of Texas
against WD alleging infringement of U.S. Patent No. 7,110,744. The complaint seeks injunctive relief and
unspecified monetary damages, fees and costs. The patent allegedly relates to WD's AC router products. WD intends
to defend itself vigorously in this matter.
Seagate Matter
On October 4, 2006, plaintiff Seagate Technology LLC ("Seagate") filed an action in the District Court of Henne-
pin County, Minnesota, naming as defendants WD and one of its now former employees previously employed by
Seagate. The complaint in the action alleged claims based on supposed misappropriation of trade secrets and sought
injunctive relief and unspecified monetary damages, fees and costs. On June 19, 2007, WD's former employee filed a
demand for arbitration with the American Arbitration Association. A motion to stay the litigation as against all
defendants and to compel arbitration of all Seagate's claims was granted on September 19, 2007. On September 23,
2010, Seagate filed a motion to amend its claims and add allegations based on the supposed misappropriation of addi-
tional confidential information, and the arbitrator granted Seagate's motion. The arbitration hearing commenced on
May 23, 2011 and concluded on July 11, 2011.
On November 18, 2011, the sole arbitrator ruled in favor of WD in connection with five of the eight alleged trade
secrets at issue, based on evidence that such trade secrets were known publicly at the time the former employee joined WD.
Based on a determination that the employee had fabricated evidence, the arbitrator then concluded that WD had to know of
the fabrications. As a sanction, the arbitrator precluded any evidence or defense by WD disputing the validity,
misappropriation, or use of the three remaining alleged trade secrets by WD, and entered judgment in favor of Seagate with
respect to such trade secrets. Using an unjust enrichment theory of damages, the arbitrator issued an interim award against
WD in the amount of $525 million plus pre-award interest at the Minnesota statutory rate of 10% per year. In his decision
with respect to these three trade secrets, the arbitrator did not question the relevance, veracity or credibility of any of WD's
ten expert and fact witnesses (other than WD's former employee), nor the authenticity of any other evidence WD presented.
On January 23, 2012, the arbitrator issued a final award adding pre-award interest in the amount of $105.4 million for a
total final award of $630.4 million. On January 23, 2012, WD filed a petition in the District Court of Hennepin County,
Minnesota to have the final arbitration award vacated. A hearing on the petition to vacate was held on March 1, 2012.
On October 12, 2012, the District Court of Hennepin County, Minnesota vacated, in full, the $630.4 million
final arbitration award. Specifically, the Court confirmed the arbitration award with respect to each of the five trade
secret claims that WD and the former employee had won at the arbitration and vacated the arbitration award with
respect to the three trade secret claims that WD and the former employee had lost at the arbitration. The Court
ordered that a rehearing be held concerning those three alleged trade secret claims before a new arbitrator.
On October 30, 2012, Seagate initiated an appeal of the District Court's decision with the Minnesota Court of
Appeals. Oral arguments in the appeal were held on April 24, 2013. On July 22, 2013, the Minnesota Court of
Appeals reversed the District Court's decision and remanded for entry of an order and judgment confirming the arbi-
tration award. The Company strongly disagrees with the decision of the Court of Appeals, believes that the District
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