A California jury has ordered Phillips 66 Company to pay nearly $605 million in damages for misusing trade secrets belonging to Propel Fuels, Inc. The ruling, delivered on October 16, 2024, held Phillips 66 liable after concluding that it had willfully misappropriated proprietary information during acquisition negotiations with Propel, a company specializing in low-carbon fuels.
The legal battle began in 2017 when Propel and Phillips 66 entered discussions to potentially merge or collaborate on Propel’s innovative renewable gasoline and diesel technologies. Propel shared sensitive data under a non-disclosure agreement to facilitate these talks. However, the negotiations abruptly ended in 2018, and in 2019, Phillips began marketing its renewable fuel products, raising suspicions of trade secret infringement led to Propel filing suit in 2022, citing California’s Unfair Competition Law.
The jury’s findings paved the way for the court to impose exemplary damages in a subsequent ruling, which occurred on July 30, 2025. The court awarded Propel $195 million as punitive damages, citing the defendant’s conduct as “reprehensible.” While Propel had sought a far larger sum of $1.2 billion, the court determined that the awarded amount was adequate and closely aligned with the profits Phillips gained from the trade secrets.
The presiding judge pointed to several troubling behaviors from Phillips 66, including having the same executives responsible for due diligence also oversee separate renewable diesel initiatives. Additionally, the court pointed out that the defendant had misleadingly assured Propel that negotiations were on track even after key decisions had been made against proceeding with the deal.
The court emphasized the staggering nature of the verdict, noting that it approximately reflected the benefits Phillips had wrongfully obtained. The $195 million award was seen as a measure directly tied to the value of Propel’s contributions, which effectively saved Phillips extensive time and costs in research and development.
This ruling is one of the largest of its kind in trade secret litigation history, highlighting a trend where juries demonstrate strong support for plaintiffs in perceived imbalances of power between large corporations and smaller firms. Legal experts suggest that companies engaging in similar negotiations may want to establish clear boundaries in their due diligence practices to prevent further disputes, such as ensuring independent teams handle sensitive information and maintaining open communications throughout the process.
The case serves as a potent reminder of the importance of protecting intellectual property, particularly for companies that rely on innovation in competitive markets.
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