Open Letter from Bill Watkins on Innovation and Intellectual Property

April 14, 2008

Today I would like to address an important issue currently facing the storage industry: innovation and the protection of intellectual property at a time of technological convergence.

As a whole, our industry is in a very strong position. The explosion of digital content has created global demand for storage products that will only increase as the world becomes more digitally oriented and connected. Recent advances in storage technologies are beginning to blur the line between what had previously been distinct segments in the storage industry. These advances are resulting in faster, smaller products capable of storing more data in increasingly secure forms.

Seagate is at the forefront of those advances. Over the past 10 years, we have invested $7 billion in research and development and have more than 3,900 United States patents in our portfolio. This is one of our core strengths and has consistently made us a global leader in storage. We have a widely recognized history of innovating and embracing promising technologies to better serve our customers and make our own enterprise more competitive.

Of course, while we enjoy a leadership position, we are not alone in efforts to innovate. Other storage companies are also focusing R&D resources on next-generation products, and we welcome this competition as we believe it drives innovation, benefits customers and results in a host of other benefits to our increasingly digital world.

Unfortunately, others in our industry have taken shortcuts in the race to innovate, and in the process, we believe they are relying on intellectual property developed or acquired by Seagate to their own benefit. Seagate has not been a particularly litigious company, but we have an obligation to our company and our shareholders to protect what belongs to them.

So today, we have initiated a patent infringement lawsuit against STEC, Inc. based on our belief that STEC is infringing a number of Seagate’s U.S. patents.

As we hold key patents on nearly every form of storage technology, I expect pressures on our competitors will mount and we may see additional encroachment on our intellectual property. Of course, it would be our preference to avoid costly and distracting lawsuits and to instead pursue constructive commercial partnerships and licensing agreements with others in our industry. We believe the pace of innovation could increase exponentially as a result of these types of commercial relations. However, until the underlying infringment is stopped, it is necessary for us to take all of the required steps, including legal action against those parties who are improperly utilizing Seagate’s IP.

As there has already been some speculation in the press about our motives for pursuing these legal claims, let me be clear: This is not about stifling innovation or threats to our business from solid state technology. We welcome advances in this, and other technologies, and in fact we continue to invest considerable R&D funds and now have teams of people focused on the development of Seagate solid state and related technologies. What this lawsuit is about is preserving for our shareholders the value we have created by building an industry-leading patent portfolio.

Bill Watkins
CEO, Seagate Technology