Tuesday, September 22, 2009, 9/22/2009 10:38:00 AM

GM's Daewoo Sues to Stop Russian Automaker from Selling Compact Sedan Allegedly Created Using Stolen Trade Secrets

By Todd

The Korea Times is reporting that Daewoo, the South Korean unit of General Motors, said Tuesday it has filed a court injunction to stop a Russian auto maker from selling a compact sedan, which was allegedly built using its stolen technology.


The court action comes nearly two weeks after local prosecutors arrested two former GM Daewoo employees on charges of handing over core information on the company's popular "Lacetti" sedan before getting jobs at the local branch of Russian auto firm TagAZ.


Another former GM Daewoo employee and executive of TagAZ Korea committed suicide as the investigation widened."GM Daewoo will first see the court's decision on the injunction before filing a damages lawsuit against TagAZ Korea," said GM Daewoo spokesman Park Hae-ho.


Prosecutors suspect the former employees of GM Daewoo copied over 6,000 files from their personal computers containing crucial technology details on engine and parts designs to build the Lacetti.


It is believed that the leaks helped TagAZ introduce its latest "C-100" model sedan in Russia.


GM Daewoo officials say it costs around 300 billion won ($245 billion) to develop a model such as the Lacetti.


GM Daewoo's petition is aimed at banning the Russian competitor from developing, manufacturing and selling vehicles that were built with GM Daewoo's technology, Park said. The latest industrial spy case has dealt a blow to the cash-strapped auto maker's brand image and chances of receiving a new loan from South Korea's state-run Korea Development Bank.


GM Daewoo has been in talks with the local lender since early this year after it exhausted a $2-billion credit line. The U.S. parent firm's financial difficulties have troubled the negotiations, but Jay Cooney, GM Daewoo vice president of communications and public policy, told reporters Tuesday at a new car launching event that the talks may be wrapped up in October with the visit of GM CEO Fritz Henderson.


The company unveiled the Lacetti Premiere ID, a revamped model of the Lacetti Premier, at the same event. The compact sedan, equipped with a hydromatic six-speed automatic transmission, will go on sale starting next month.

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