Intellectual property disputes often make headlines when they involve patents, trademarks, or counterfeit goods. But a recent California ruling affirming an $833 million judgment in favor of Propel Fuels against Phillips 66 illustrates that trade secrets, though less visible, can carry enormous legal and financial consequences.
For businesses entering acquisition discussions, partnerships, or market expansion planning, the decision is a timely reminder that confidentiality obligations do not disappear when negotiations end.
What Sparked the Conflict?
Propel Fuels allowed Phillips 66 to review detailed financial projections, market analyses, strategic planning documents, and internal performance data as part of potential acquisition discussions. The information was disclosed under a non-disclosure agreement, a standard requirement in due diligence.
However, when Phillips 66 terminated the negotiations and later entered the renewable fuels retail market on its own, Propel alleged that the competing initiative was built using the confidential information shared during those discussions.
A jury agreed, awarding more than $600 million in compensatory damages. The trial court then added exemplary damages, bringing the total to $833 million. A 52-page post-trial order has now affirmed the full amount and rejected all defense challenges.
Understanding Trade Secret Protection
Trade secrets differ from other forms of intellectual property in several key ways.
Specifically, they protect commercially valuable information that:
- is not generally known,
- provides a competitive advantage, and
- is subject to reasonable measures to keep it confidential.
Unlike patents, trade secrets require no registration.
Instead, they often involve:
- pricing structures
- feasibility and expansion plans
- supplier and customer insights
- financial modeling
- algorithms or process workflows
In this case, the court found that internal planning documents from Phillips 66 referenced materials derived from Propel’s confidential data – evidence that became central to the verdict.
Why Businesses Need to Pay Attention to This Verdict
The ruling highlights several important principles:
An NDA is enforceable. Courts will scrutinize how confidential information was used, not merely how it was received.
Ending negotiations does not end obligations. Information shared for evaluation cannot be repurposed for competition.
Misuse can be indirect. Even knowledge retained mentally – without taking documents – may constitute misappropriation.
Damages can escalate quickly. Exemplary damages and 10% annual interest significantly increase exposure.
Every business has trade secrets. They can exist even in ordinary operational data, not just sophisticated technology.
Practical Takeaways to Think About
Businesses should consider:
- identifying and labeling trade secrets as confidential materials,
- limiting access during due diligence,
- training employees on maintaining the confidentiality of trade secrets and protocols involved in competitive planning,
- reviewing internal files before launching similar initiatives, and
- implementing exit protocols when negotiations terminate.
These measures are preventative and may determine whether a company can successfully enforce its rights if a dispute arises.
For companies navigating negotiations, collaborations, or shifting competitive strategies, understanding how trade secret protections apply can help avoid costly consequences or enforce valuable rights if misuse occurs.
If your business is entering discussions where sensitive information may be shared (or if you are concerned about protecting proprietary data), reach out for help.