Judge Denies VW Request to Dismiss Remaining Industrial Espionage Claims

12/04/96

Reuters has reported that on Monday a federal judge in Detroit denied Volkswagen's motions to dismiss the remaining claims of industrial espionage in the suit that General Motors has filed against the German carmaker. The decision clears the way for GM's lawsuit against VW to proceed.

U.S. District Judge Nancy Edmunds' ruling allowed GM to pursue claims that Volkswagen and several of its top executives violated copyright, trademark and unfair competition laws when they allegedly stole GM's trade secrets. The decision was the second major setback for VW in GM's U.S. lawsuit against it. Last week Judge Edmunds allowed GM to pursue their claims under the RICO act (Racketeer Influenced and Corrupt Organizations), which was originally designed to target organized crime but has recently been used in suits involving paramilitary organizations. Under the RICO act GM could win triple damages from VW. Judge Edmunds has denied almost all of VW's motions in the case, to date.

The GM suit against VW centers principally around former VW production chief, Jose Ignacio Lopez de Arriortua and allegations that he masterminded a scheme to steal secret Documents from GM when he left the Detroit automaker's Opel subsidiary in 1993 to work for Volkswagen. Lopez announced his resignation from VW on Friday, stepping up speculation that the case may be settled out of court.

Both GM and its German subsidiary Opel have denied that they have been negotiating an out-of-court settlement with VW, and on Monday GM spokesman John Mueller said that GM was prepared to let the case proceed.

Commenting on Judge Edmunds' most recent decisions, Mueller said, "Judge Edmunds' decision today denies motions by the defendants to dismiss GM's and Opel's allegations of wrongdoing under the U.S. federal copyright laws and the Lanham Act. Her decision supports our position and clears the way for those allegations to be heard in the upcoming trial along with our RICO claims." The Lanham Act is the federal unfair competition law.

Paul Dever -- The Auto Channel