General Motors vs. Volkswagen Industrial espionage: Former GM executive who became VW president accused.

December 03, 1996

IT IS FITTING that the central figure in the massive industrial espionage case General Motors has brought against Volkswagen is a Spaniard. Both of these multi-national automakers have huge stakes on one another's home turf. U.S.-based GM owns Adam-Opel, one of Germany's big auto manufacturers. Germany-based VW has an extensive network of distributorships in this country.

The dispute is a highly personalized one in which a Spanish-born visionary, Jose Ignacio Lopez de Arriortua, is accused of making off with reams of GM documents and computer files when he was hired away from General Motors by Volkswagen in 1993. Mr. Lopez resigned as VW's president last week as GM-inspired legal action gained momentum in both the United States and Germany.

German investigators and prosecutors have been amassing evidence that could lead to criminal charges, including possible jail time, against Mr. Lopez. U.S. litigation would involve only money -- potentially a lot of it under the triple damages provisions of U.S. law. But before it comes to that, there could be out-of-court settlements lest both automakers suffer at the hands of their mutual competitors.

There is no disputing that Mr. Lopez took with him one of the most creative brains in the worldwide auto industry when he made the jump from GM to Volkswagen. He was credited with revolutionizing GM's system for purchasing component parts and planning factories of the future. Since joining VW he has improved the German auto-maker's performance.

What is very much at issue, however, is whether Mr. Lopez took not only his brain but proprietary data that belonged strictly to General Motors. The circumstantial evidence: GM documents translated into German the day Mr. Lopez switched employment; a VW-owned airplane flying caseloads of GM documents out of Detroit; shredders and copying machines found during raids by German investigators.

Yet VW executives have insisted that nothing owned by GM was put to their own use. Unappeased by Mr. Lopez' resignation, GM is insisting on a formal apology, the firing of a number of Lopez associates who also jumped to VW and the payment of extensive damages.

Whether executives at Wolfsburg wind up having to make such concessions is still a mystery. But what is clear is that in a world of multi-national corporations with revolving doors, there is a need for more precise definitions of what is and is not purloinable.

Pub Date: 12/03/96

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