Dec. 23 (Bloomberg) -- Siemens AG, Europe’s largest engineering company, lost a patent-infringement trial against Seagate Technology in which it was demanding $160 million over technology used to read computer data.

A U.S. jury in Santa Ana, California, found that even though Seagate infringed one of the German company’s patents, the patent was invalid and therefore Siemens is owed nothing. The verdict came on the third day of deliberations in a federal court trial that began Nov. 14.

The patent was a key component in a sensor-layer system that measures contacts on hard-disk drives on which documents, music, video and other material are compacted and stored, attorneys for Munich-based Siemens told the jury of seven women and two men.

The sensor system is a major factor in modernizing computers by helping make them “faster, smaller and better,” John O’Malley, a Siemens attorney with Fulbright & Jaworski in Los Angeles, told the jury during the trial.

Seagate lawyers based their defense on the invalidity of the patent, which is used for technology to help decode huge amounts of data stored on hard-disk drives. Seagate also argued that its equipment uses technology leased from International Business Machines Corp., which predates the Siemens patent.

‘Crazy Number’

Seagate lawyer David Gross said the invention would have been obvious to scientists who were aware of IBM’s and other disk-storage technology. Gross, with Faegre & Benson in Minneapolis, also said Siemens shouldn’t be allowed to enforce the patent because it failed to tell the U.S. Patent and Trademark Office that it was aware of two professional papers published on the technology by one of the inventors of the IBM patent two years earlier.     In his closing argument, Gross called the request for $160 million “a crazy damages number.”

“The patent doesn’t contain a new invention and Seagate uses technology developed by International Business Machines Corp.,” said Gross. “IBM invented this technology, Seagate licensed the technology from IBM and now Siemens somehow wants some money.”

‘Pleased With Verdict’

“We’re quite pleased with the verdict,” Gross said today. “We felt the evidence supported a complete defense verdict.”

U.S. District Judge James Selna ruled before the trial that Seagate used the technology and infringed the patent. Jurors were asked to decide whether the patent was valid and whether Siemens was entitled to cash compensation.

When the trial began, Siemens asked for damages of as much as $366 million, based on a 3 percent royalty of what the German company said was $12.2 billion in sales of hard-disk systems that allegedly infringed the patent. Selna limited the damages that can be sought to only those based on certain sales made after Nov. 24, 2004.

Seagate, which is based in the Cayman Islands and run from Scotts Valley, California, is the biggest U.S. manufacturer of hard-disk drives.

Siemens American depositary receipts, each representing one ordinary share, fell 69 cents to $70.70 at 4:15 p.m. on the New York Stock Exchange. Seagate fell 6 cents to $4.35 in Nasdaq Stock Market trading.

The case is Siemens AG v. Seagate Technology, 06cv788, U.S. District Court, Central District of California (Santa Ana).

To contact the reporters on this story: Bill Callahan in San Diego at callahan@san.rr.com; William McQuillen in Washington at bmcquillen@bloomberg.net.

Last Updated: December 23, 2008 17:08 EST