When is a gigabyte not a gigabyte? When Seagate uses a misleading definition of “gigabyte” to make it seem that its hard drives have more capacity than they actually do.

Seagate has agreed to settle a class action law suit, filed in a California court, that stemmed from the way Seagate marketed its hard drives, which made it seem that they had an additional 7% of usable storage capacity.

Sarah Cho, who had filed an initial lawsuit in March 2005, alleged that Seagate’s use of the decimal definition of 1 GB (where 1GB equals 1 billion bytes) was misleading to consumers. Cho argued that Seagate should use the binary definition where 1 GB is equal to 1,073,741,824 bytes – a difference of approximately 7% from Seagate’s figures.

As compensation to its customers who purchased a hard drive during the last six years, Seagate is offering cash refund of 5% or free backup and recovery software. The offering, however, does not apply to customers outside of the US.

Seagate spokesperson Woody Monroy told Ninemsn that “Seagate is pleased to have reached a settlement of the litigation.”

“Seagate believes that its advertising and other business practices were, and are proper in all respects. However, because of the expense and burden of litigation, Seagate believes that resolving the matter through settlement is in the best interests of Seagate and its customers,” he added.

Under the terms of the settlement, Seagate will label its hard drives with disclosures regarding its storage capacity, and will pay court costs of $US1.75 million.

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Entry was posted on Thursday, November 1st, 2007 at 9:19 pm under Legal.

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