First, shame on vmware for trying "you don't have a copyright interest" argument. If you manage to build a kernel with zero of his contributions, then maybe this argument has merit; but you haven't, you are using his copyrighted work, straight up.
As for license violation? Tricky. The typical "GPL case in Germany" has been companies using GPL'ed software while TOTALLY ignoring the GPL (no acknowedgment of GPL software, no source code for modified software, no link to kernel.org or wherever for unmodified software.)
This isn't that clear cut - in this case, there's a proprietary "VMKernel" that is not Linux-derived and is closed-source.. this does all the virtualization, and has some drivers available for it (but nowhere near as many as Linux supports). This VMKernel can load "vmklinux", which is a full (well, stripped down) Linux kernel, used to load Linux driver modules (for disk and network I assume), and there's a few VMWare support modules that this loads to pass data between vmklinux and VMKernel.
VMWare has full source up for vmklinux and (I think) the support modules. But the argument being made is that VMKernel and vmklinux are basicaly tied together into a single product.
Personally, I can see why people are unhappy about it, but I do think VMWare's design successfully keeps the VMKernel and vmklinux seperate, with a shim layer in between. The fact that vmklinux is ONLY useful with VMKernel/ESXi is immaterial, plenty of Linux kernel ports are single-purpose. BUT, it is kind of pushing it so I can see how it could be argued the other way too.