Trouble can start if the M&A doesn’t go through (for whatever reason). The acquiring company has now been exposed to many trade secrets of the target company and has to be extra careful to avoid contamination. Trade secret contamination is especially dangerous as it can gradually spread through an organization and “infect” products and services going forward.
A recent example is Propel Fuels v. Phillips 66. Phillips evaluated Propel for a possible acquisition but terminated negotiations and then launched its own competing renewable fuels. Propel sued for breach of their NDA and theft of 88 trade secrets including financial data and business strategies. Propel won $604.9 million in damages from the jury, and the court might triple the damages due to willful and malicious conduct by Phillips. Serious damages! If the damages are enhanced, this will be one of the highest trade secret awards at the trial level.
What can you do if you’re in this situation? Be specific and articulate what your trade secrets are, have a solid NDA, and notify or get acknowledgement from the recipient when you share trade secrets. Basically, follow Tangibly’s five best practices!
Did you know you can implement Tangibly’s five best practices right now? Try Tangibly for free at tangibly.com/try!
