Contract – Inventor alleges that defendant breached NDA

Where an inventor alleged it shared its designs for a new product with the defendant under a promise of confidentiality and limits on use, and that the defendant then breached those promises, the inventor’s claim for breach of a non-disclosure agreement survived the defendant’s motion to dismiss.

Background

Rainscreen support brackets are nestled inside the walls of buildings across the world. These small metal brackets secure rail systems designed to create a crucial air cavity between a building’s main wall and its cladding—the non-structural protective layer on the exterior of the building.

ECO Cladding Inc. alleges that it designed a new type of rainscreen support bracket then shared the designs with Hohmann & Barnard Inc., or H&B, for an evaluation of manufacturing feasibility and costs pursuant to a non-disclosure agreement. Almost two years later, the parties signed a supply agreement apparently intended to accelerate ECO’s plans to bring the product to market.

When ECO discovered that H&B was marketing a new product that looked exactly like the designs created by ECO, their relationship soured. ECO sued H&B in state court, alleging that H&B misappropriated and improperly disclosed ECO’s confidential information. H&B removed the action to this court and now moves to dismiss ECO’s complaint.

NDA

ECO alleges that H&B breached the non-disclosure agreement, or NDA, by wrongfully taking, retaining, using and disclosing ECO’s confidential information. The NDA states that it “shall be construed in accordance with the laws of the State of Delaware.”

H&B argues that Delaware law requires heightened specificity from plaintiffs when pleading a breach of non-disclosure agreements. But the one Delaware case it cites does not support this proposition. H&B’s numerous citations to non-Delaware case law do not convince the court that such a standard applies in Delaware.

ECO’s complaint alleges specific contractual duties for H&B under the NDA — for example, to “maintain the secrecy of ECO’s confidential information” and to use the confidential information only to accomplish the intent of the NDA — and that H&B breached those duties. Any factual disputes over what information was publicly known and therefore not covered by the NDA are not appropriate to resolve at this stage of litigation. Accordingly, the court finds that ECO sufficiently stated a plausible claim that H&B breached the NDA.

Supply agreement

ECO alleges that H&B breached the supply agreement by failing to create and provide a progressive die to ECO. That agreement is subject to “the laws and decisions of the State of New York.”

H&B argues that the agreement did not require it to create or provide a progressive die. The court finds that the only provisions in the supply agreement referencing the progressive die do not include an express obligation for H&B to create a progressive die nor provide it to ECO. The terms only provide that ECO will own the die after they have paid H&B in full for it. To the extent that ECO intends to argue that such a duty was implied by the contract, it has not alleged sufficient facts to support that theory.

H&B also argues that, even if the supply agreement required H&B to create and deliver the progressive die to ECO, ECO still fails to allege that ECO performed its obligations under the contract—namely, that it paid for the tooling. The court agrees. Accordingly, the court finds that ECO failed to state a claim that H&B breached the supply agreement.

Conversion

ECO alleges that H&B wrongfully took, assumed authority over and used ECO’s New Product Design and other confidential information, depriving ECO of the economic benefits that would flow from them. ECO’s claims are barred by Virginia’s source-of-duty rule. ECO’s conversion claim is essentially identical to its claim that H&B breached the NDA, and therefore separate tort liability cannot arise.

Fraud

ECO fails to allege sufficient facts to plausibly allege fraud in the inducement. The complaint is devoid of any facts to suggest that H&B made any representations “while knowing, at the time they were made, that the representations were false and that H&B did not intend to perform as promised.” Similarly, ECO does not allege a single fact to suggest H&B had any “intent to mislead ECO into entering into the agreements.”

Defendant’s motion to dismiss granted in part, denied in part.

Eco Cladding Inc. v. Hohmann & Barnard, Inc., Case No. 5:25-cv-00068, Feb. 6, 2026. WDVA at Harrisonburg (Yoon). VLW 026-3-052. 15 pp.

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