When most business owners hear the term “intellectual property,” what comes to mind are patents, trademarks, and copyrights. However, trade secrets are part of IP and just as valuable and vulnerable. A recent court decision awarded $800 million in damages over confidential business information that was stolen. As a business sharing sensitive data during negotiations, partnerships, or due diligence, this case is a stark reminder that confidentiality obligations do not disappear when talks fall apart, and misusing inside information can have severe consequences.
A Deal That Turned Into a Lawsuit
The dispute arose when Propel Fuels and Phillips 66 entered negotiations in 2017 to explore a possible acquisition or joint venture. During this process, the parties signed a non-disclosure agreement (NDA) allowing confidential business information to be shared safely.
However, according to the lawsuit, negotiations abruptly ended in 2018. Then, soon after that, the defendant launched its own competing renewable fuel product. Propel Fuels, the plaintiff, alleged that the new venture relied on proprietary data disclosed during negotiations, including business models, pricing, and technical information. In 2024, a jury agreed with this, finding willful trade secret misappropriation and awarded over $600 million in compensatory damages. In July 2025, a court later affirmed this and awarded exemplary damages of $195 million, citing the conduct as egregious.
What Counts as a Trade Secret?
Trade secrets generally protect valuable business information that’s not publicly known. They give a company a competitive edge, provided the firm takes reasonable steps to keep that information confidential. You don’t have to register a trade secret. The protection exists as long as secrecy is maintained.
A trade secret may include pricing strategies, customer data, supply chain details, expansion plans, financial projections, algorithms, and internal processes. In the dispute between Propel Fuels and Phillips 66, internal documents referencing Propel Fuels’ confidential information became key evidence.
Why This Verdict Matters to Your Business
This ruling reinforces several legal principles. First, it reminds business owners that NDAs are not mere formalities. Courts will closely examine how confidential information was actually used. Secondly, ending negotiations doesn’t imply that confidentiality duties end as well. Information shared for evaluation cannot later be used to compete when talks fall through. Finally, the ruling demonstrates how the financial consequences of trade secret violations can spiral quickly. In this case, the court awarded punitive damages, which go beyond compensating the injured company, as they are meant to punish wrongdoing.
Practical Steps To Reduce Risk
As a business owner, you can take several steps to protect yourself during and after the transactions:
Identify and Label Confidential Information
Clearly mark proprietary materials as confidential and restrict access to only individuals who genuinely need it.
Limit Access Through Clean Teams
Use designated review teams, preferably not part of product development or strategic decision-making, to evaluate data during due diligence.
Review Internal Materials Before Launching Similar Initiatives
Conduct internal audits to ensure new products or strategies are independently developed and not influenced by prior confidential disclosures.
Implement Exit Procedures When Talks End
To reduce the risk of future misappropriation claims, consider returning, destroying, or certifying the deletion of shared materials and revoking system access to demonstrate good faith compliance.
Contact the Business Attorneys at Revision Legal
For more information, contact the experienced Business lawyers at Revision Legal. You can contact us through the form on this page or call (855) 473-8474.
The Defend Trade Secrets Act and Federal Protection
The Defend Trade Secrets Act of 2016 (DTSA), 18 U.S.C. §§ 1831–1839, created a federal civil cause of action for trade secret misappropriation. The DTSA provides several advantages: federal court jurisdiction, the ability to seek an ex parte seizure order in extraordinary circumstances to prevent dissemination of the secret, and the availability of exemplary damages up to two times actual damages for willful and malicious misappropriation. The Propel Fuels verdict—with its $195 million in exemplary damages—was authorized precisely because the jury found the defendant’s conduct willful and egregious, satisfying the predicate for enhanced damages under the DTSA framework.
What Makes Information a “Trade Secret” Under the Law
Under the DTSA, a trade secret is defined as information that: (1) the owner has taken reasonable measures to keep secret; and (2) derives independent economic value from not being generally known to, and not being readily ascertainable by, persons who could obtain economic value from its disclosure. Both elements must be satisfied. Information that is publicly available does not qualify. And information that is internally treated as confidential but is freely shared without confidentiality agreements is unlikely to qualify because the “reasonable measures” requirement has not been met.
The NDA as the First Line of Protection
The NDA signed by Propel Fuels and Phillips 66 was central to the case—both as evidence of the parties’ intent to maintain confidentiality and as the contractual baseline against which misappropriation was measured. A legally enforceable NDA should identify with specificity the categories of information that are confidential, define the permitted scope of use, set a clear term of confidentiality that extends beyond the relationship itself, and specify remedies—including the right to seek injunctive relief—upon breach. Generic template NDAs frequently fail on enforceability grounds because they use circular definitions, omit return-or-destruction provisions, or lack sufficient consideration.
Operational Measures That Support Legal Protection
Courts do not require airtight security, but they do require evidence that the business treated the information as secret in practice. Reasonable measures typically include: restricting access to sensitive information on a need-to-know basis; using password-protected systems with access logs; marking confidential documents as “Confidential” or “Proprietary”; requiring employees and contractors to sign confidentiality agreements as a condition of access; conducting exit interviews and implementing offboarding checklists when employees with access depart; and conducting periodic audits of who has access to sensitive data.
Trade Secret Misappropriation by Employees
The most common source of trade secret theft is a departing employee. Forensic analysis in litigation routinely reveals that employees downloaded large volumes of confidential data before resigning. The DTSA and most state equivalents define misappropriation to include acquisition by improper means and disclosure or use without consent. When a departing employee takes confidential business information to a competitor, both the employee and the hiring company may be liable. Cases like PepsiCo, Inc. v. Redmond, 54 F.3d 1262 (7th Cir. 1995), established that the “inevitable disclosure” doctrine can support injunctive relief preventing a former employee from using trade secrets in a new competitive role, even absent direct proof of actual misappropriation.
Immediate Steps When Misappropriation Is Suspected
If you discover that a former partner, employee, or competitor is using your confidential business information, time is critical. You should immediately: engage counsel to send a preservation demand; conduct a forensic review of your own systems to identify what was accessed; evaluate whether circumstances justify filing for a temporary restraining order or preliminary injunction; and consider whether the Economic Espionage Act, 18 U.S.C. §§ 1831–1839, applies for criminal referral.
The $800 million verdict in the Propel Fuels case is a powerful reminder that trade secret law has real teeth. Whether you are entering a business negotiation, onboarding a new employee, or building a confidentiality program from scratch, Revision Legal can help you protect what you have built. Contact us for a confidential consultation, or visit our Trade Secrets practice page to learn more about protecting your most valuable business information.
