Welcome to WilmerHale's bulletin on recent trade secret case law and relevant news items. We've affectionately nicknamed it "Readily Ascertainable" because, unlike a trade secret, it should be easy to figure out. If you have any questions about these cases or the legal questions they implicate, our trade secret team would be delighted to answer them.
This month's cases involve an award of $195 million in exemplary damages (one of the largest in recent years), the Fourth Circuit's pleading standards for identifying trade secrets with sufficient particularity, a reminder that trade secret information is not immune from discovery, and a Ninth Circuit reversal holding that a district court improperly struck alleged trade secrets without discovery.
Propel Fuels Inc. v. Phillips 66 Co., No. 22CV007179 (Cal. Super. Ct. July 30, 2025)
California Superior Court orders Phillips 66 to pay $195 million in punitive damages.
As we previously covered, a California jury awarded Propel Fuels $604.9 million after finding Phillips misappropriated trade secrets during a failed acquisition. Following the jury award, Propel sought the maximum exemplary damages award available to it under the CUTSA: $1.2 billion.
Phillips initially argued that a limitation of liability clause in the parties' non-disclosure agreement (NDA) precluded Propel from seeking exemplary damages. Propel countered that the parties' NDA was invalid under Civil Code § 1668, relying on the California Supreme Court's recent holding in New England Country Foods, LLC v. VanLaw Food Products, Inc., 17 Cal.5th 703, 707 (Apr. 24, 2025) that "a limitation on damages for willful injury to the person or property of another is invalid under section 1668." The court concluded that the New England Country Foods decision "resolve[d] Phillips 66's defense under the NDA categorically in Propel's favor." It determined that following the VanLaw decision, Phillips could not use the limitation of liability clause to preclude Propel from obtaining exemplary damages.
The court found exemplary damages were warranted due to Phillips' "reprehensible" misconduct and determined that an exemplary damages award of $195 million "is directly tied to the real‑world value of the benefit of the parties' bargain." To arrive at the $195 million exemplary damages figure, the court trebled the acquisition price Phillips originally agreed to pay—an initial purchase price of $40 million and a $25 million bonus to Propel's management team for reaching post‑acquisition milestones. The court determined that when considering the total judgment against Phillips—more than $799 million—this amount would not be just a routine cost of doing business.
Sysco Machinery Corp. v. DCS USA Corp., 143 F.4th 222 (4th Cir. 2025)
Fourth Circuit reaffirms that the DTSA requires trade secrets to be defined with sufficient particularity and declines to adopt pleading presumptions that would disincentivize clear contractual language.
The Fourth Circuit affirmed the district court's dismissal of Sysco's amended complaint asserting trade secret claims against DCS arising from the parties' manufacturer-distributor relationship.
The Fourth Circuit held that both North Carolina law and the federal Defend Trade Secrets Act require plaintiffs to identify the underlying trade secrets with "sufficient particularity" and that this standard requires plaintiffs to describe their trade secrets at a level of detail that "enables a court to determine whether the plaintiff has plausibly satisfied the reasonable secrecy and independent economic value requirements." Put simply, "[n]either the defendant nor the court should be forced into a fishing expedition to find evidence of a valid trade secret in the pleadings."
The court held that Sysco's complaint failed to sufficiently plead the trade secrets it accused DCS of misappropriating, determining that Sysco's trade secret definitions suggested that "nearly Sysco's entire business" was a trade secret. The court declined to adopt Sysco's position that nearly all information a manufacturer considers confidential should be presumed to be a trade secret because doing so would "disincentivize businesses from setting clear, mutually agreeable contractual expectations" and would instead incentivize businesses to "leave the terms of their arrangement ambiguous and then allege misappropriation whenever the relationship sours."
The court also held that "Sysco did not plausibly allege misappropriation because it did not make clear how DCS acquired, disclosed, or used its trade secrets." Not only did Sysco fail to allege DCS was in possession of any of Sysco's trade secrets, the allegations in the complaint also did not make clear why DCS's actions were improper. The court found that any information DCS possessed about Sysco appeared to have been acquired lawfully as part of the parties' ordinary manufacturer-distributor relationship.
Buergofol GmbH v. Omega Liner Co., Inc., No. 2025-1817, 2025 WL 2048053 (Fed. Cir. July 22, 2025)
Federal Circuit denies writ of mandamus seeking to vacate an order compelling discovery of trade secret information.
This dispute arises from Buergofol's patent infringement suit against Omega regarding pipe liners made with Buergofol's proprietary films. Omega sought discovery of manufacturing details including the composition of a wax-based adhesion promoter called "Wax 40" to defend against Buergofol's patent infringement claims and to support its invalidity defense. Buergofol refused to produce that information because it alleged its Wax 40 product was a trade secret. The district court ordered production (on an attorney's eyes only basis), and the Federal Circuit denied Buergofol's petition for writ of mandamus, agreeing with the district court that Buergofol "put its films directly at issue when it sued Omega and claimed that Omega liners using Buergofol film infringed the relevant patent." The Federal Circuit further held that Buergofol had not shown a clear abuse of discretion in the district court's decision that Omega had a demonstrable need for the trade secret information and emphasized that trade secret protections do not render relevant information immune from discovery.
Quintara Biosciences, Inc. v. Ruifeng Biztech, Inc., No. 23-16093, 2025 WL 2315671 (9th Cir. August 12, 2025)
Ninth Circuit holds that district court improperly struck alleged trade secrets without discovery.
The Ninth Circuit held that the district court erred in striking certain of plaintiff Quintara Biosciences' alleged trade secrets. The district court earlier ordered Quintara to disclose with "reasonable particularity" each of its allegedly misappropriated trade secrets at the outset of discovery, a rule borrowed from the California Uniform Trade Secret Act (CUTSA). Defendant Ruifeng Biztech then moved to strike Quintara's trade secrets under Federal Rule of Civil Procedure 12(f). Citing its discretion to manage discovery as well as Rule of Civil Procedure 16, the district court struck the trade secrets it found were not described with reasonable particularity.
Relying on its earlier decision in InteliClear, the Ninth Circuit held that the "DTSA requires a plaintiff to identify a trade secret with 'sufficient particularity' as a matter of fact, unlike CUTSA's 'reasonable particularity' rule." The appellate court then held that nothing in "Quintara's Disclosure could be construed as a pleading, neither Ruifeng nor the district court identified any strikable matter under Rule 12(f)." As for striking the alleged trade secrets as a discovery sanction, the court applied a five factor test to determine the appropriateness of the order, and ultimate found an abuse of discretion, noting the early stage of litigation and lack of discovery.
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