IBM raises stakes in Seagate suit

Electronic News, June 15, 1992 by Gerry Khermouch

NEW YORK--IBM last week moved to broaden its suit against Seagate Technology to allege that the Scotts Valley, Calif., disk drive developer not only misappropriated IBM trade secrets but engaged in a pattern of "targeting and soliciting key IBM employees in order to raid IBM trade secrets."

In a motion to file a second amended complaint to the suit in U.S. District Court in Minneapolis, IBM charged that former IBM technology manager Brendan Hegarty, who is now Seagate senior vice president and chief technical officer, was "targeted and hired by Seagate" in 1988 and has since intentionally disclosed to whole groups of Seagate engineers highly secret IBM information," which the motion does not specify.

Dr. Hegarty thus joins another ex-IBMer now working for Seagate, Peter Bony hard, at the center of a fractious suit that the opposing sides have characterized as pitting the rights of employees to move freely within their industry against the right of companies to protect their basic technology. In statements characteristic of the rhetoric the case has generated, Dr. Bony-hard has even compared IBM's actions with the restrictions on personal freedom that encouraged him to emigrate from Hungary following the Soviet invasion in 1956.

The original suit was filed last October after Dr. Bonyhard left his post directing development of magnetoresistive (MR) head technology at IBM to accept a job with similar responsibilities as director of technology of Seagate's Minneapolis-based Advance Components division. IBM won an injunction that took Dr. Bony-hard off the program from Jan. 2 to April 6, when Seagate had the injunction overturned and returned him to the program. At the time, Seagate president Al Shugart said the delay might have succeeded in pushing back introduction of Seagate's own MR-head-based products from this year into 1993.

IBM claimed the latest allegations resulted from information revealed during the lawsuit's discovery phase and suggests Seagate has engaged in a broad effort to recruit critical IBM technology specialists in MR head technology and development efforts spanning a wide range of technology applicable to disk drives.

An attorney representing Seagate, Jamie DiBoise of Wilson, Sonsini, Goodrich & Rosati, Palo Alto, dismissed the latest motion as "just an attempt to continue (IBM's) harassment" of a competitor and contended that it is marred by key factual errors.

In particular, Mr. DiBoise cited IBM's allegation that Seagate "targeted" Dr. Hegarty for recruitment. He said Dr. Hegarty left IBM in 1987 to work for Control Data Corp.'s Imprimis unit and only joined Seagate in 1989 when it acquired Imprimis.

"We categorically deny every allegation" contained in the latest motion, Mr. DiBoise said.

Seagate officials quietly maintain that what prompted the suit are the abundant signs their company, the major independent drive vendor, is making good on its strategy of bringing new products to market more quickly than in the past, when it delayed introductions until it had wrung every element of extraneous cost out of the production provess.

IBM itself has shown signs of greater aggressiveness in this regard, particularly in bringing to market the first 1GB 3.5-inch drive last fall, in what represented the first commercial application of MR technology, which drastically boosts the areal density of drives. Seagate officials acknowledge they have been racing to bring their own MR head technology to market.