In this episode of the Reasonable Measures podcast, Tim and Chris return after a busy start to the year to dive into a landmark trade secret case: Phillips 66 v. Propel Fuels. They unpack how Propel secured a $604.9 million judgment—later tripled to a staggering $1.8 billion—due to willful and malicious trade secret misappropriation. The discussion highlights key risk mitigation strategies for companies navigating M&A due diligence and the evolving perception of trade secrets as a core intellectual property strategy. Tim and Chris also share insights from recent conferences and industry conversations, emphasizing how more organizations are proactively managing trade secret protection and governance.
Takeaways:
- Massive trade secret verdicts are becoming more common. The Propel Fuels case reached nearly $2 billion, reinforcing the financial and legal consequences of misappropriation.
- Enhanced damages signal the importance of due diligence. Courts will punish companies that exploit trade secret information obtained during M&A discussions.
- Particularity matters. Propel protected itself by clearly defining 88 trade secrets, demonstrating best practices in trade secret identification and governance.
- Trade secret strategy is maturing. Companies are shifting from reactive protection to proactive trade secret management, recognizing it as a critical IP asset.
- Conferences reflect a changing IP landscape. Industry professionals are no longer debating whether to protect trade secrets but rather how to implement strong governance frameworks.
- M&A due diligence requires caution. Companies must assume deals may not close and plan accordingly to prevent intellectual property exposure.
Transcript:
Tim (00:12): Hey, Chris, we’re at number 13—lucky number 13—of the Reasonable Measures podcast.
Chris (00:18): Hey Tim, it’s great to be here.
Tim (00:20): We’ve been a little busy, I think is the right word, right? You’ve been flying all over the place. I’m raising money. And unfortunately, the Reasonable Measures podcast took a little backseat at the start of the year. So, it’s great to be back, man. I’ve actually missed this, and we’re going to double down and knock out some episodes here. Today, we’re going to hit on one case rather quickly, and then we’re going to talk about some market insights, given both of our first quarter activities—you on the conference circuit and me between investors and customers. Some good stuff to catch up on.
So, the case we’re going to talk about today is a big one: Phillips 66 v. Propel Fuels. In 2024, this was a major decision—a $604.9 million judgment against Phillips 66 in favor of Propel Fuels. And just last week, there was an update in terms of enhanced damages.
Chris (01:59): Right. The jury initially awarded $605 million to compensate Propel for their losses. But in cases where there’s willful and malicious conduct, the judge has the ability to triple the damages, bringing it up to $1.8 billion. That’s exactly what happened here. The court determined that Phillips 66’s conduct was so egregious that it warranted enhanced damages.
Tim (03:24): That’s an enormous number. And if we look back at previous trade secret cases, it’s getting close to the Appian case, which had a high-water mark of $2 billion. But even though Appian was knocked down on appeal and is facing a new trial, this $1.8 billion decision is still a massive moment in trade secret law.
Chris (04:22): Yeah, it’s another example of the power dynamics in trade secret disputes. Propel was a startup, and Phillips 66 is a major corporation. They were engaged in due diligence for an acquisition or investment, and Propel had shared proprietary information under an NDA. This kind of scenario happens all the time—startups sharing their trade secrets, assuming the deal will go through.
Tim (05:02): Right. The problem is, when deals don’t close, all of that confidential information remains in the hands of the larger company. Propel did the right thing by specifically identifying 88 trade secrets, which made their case strong. The fact that Phillips 66 announced a competing product the very next business day after breaking off the deal? That’s a red flag.
Chris (06:18): Exactly. Propel had great documentation, and the court clearly saw that Phillips 66 was acting in bad faith. If there’s one lesson here, it’s that companies need to document and protect their trade secrets proactively. Courts are increasingly demanding specificity when identifying trade secrets, and companies that take reasonable measures to protect them are in a much stronger position.
Tim (09:14): Switching gears a bit, you’ve been out on the conference circuit. What’s the vibe in the industry right now?
Chris (09:44): It feels like we’re turning a corner on trade secrets. A few years ago, people hesitated to document anything. Now, that’s changed. Companies understand trade secrets are a real IP asset, and they’re asking the right questions: What steps do we take tomorrow to protect them?
Tim (12:51): Yeah, and from my side, I had some interesting conversations with Fortune 100 companies recently. One semiconductor company has KPIs tied to trade secrets—that’s a big shift. A pharma company recognized the importance but still faces cultural hurdles in implementation. Then, there was a company that outright said, We don’t really have trade secrets. I had to bite my tongue on that one.
Chris (15:26): Oh, they definitely have trade secrets. But it does show how different industries are at different stages of trade secret adoption. The fact that we’re even seeing KPIs around trade secrets is a huge step forward.
Tim (16:24): 100%. It’s clear—companies are moving from Should we protect trade secrets? to How do we do it effectively? That’s exciting to see.
Chris (16:49): Absolutely. It’s good to see the market catching up to what we’ve been saying all along. Trade secrets are becoming a core part of IP strategy, not just an afterthought.
Tim (16:53): Agreed. Alright, Chris, see you on the other side. Later.
Chris (16:53): Thanks, Tim. Catch you later.
