The auto industry is so incestuous as it is. If patents came to play at all, which they didn't, then the big money play would be for GM, Ford, etc.. to buy VW motors and or license the technology. Either build as good a diesel or if you somehow couldn't then buy it or the technology. There is tons and tons of precedence for it. (Heck, the Ford "PowerStroke" diesel wasn't built by Ford for the first half of its life) Auto competitors work together on tons of stuff and with something like a motor that has fuel demands, it's mutually beneficial, if Ford and GM sell small diesel cars, it's more likely there will be diesel at your nearest pump. GM and Ford build heavy diesel too, there is very very real demand if they can improve power, improve mileage and meet emissions and VAG doesn't compete in that market.

None of that happened, I think the competitors knew and I also think the EPA knew in some capacity and it wasn't until some "small time" researchers got attention that it came out.