Runlayer, a startup building a secure Model Context Protocol gateway, has filed a lawsuit against HR software firm Rippling, alleging the latter stole its product concept.
The core dispute
The complaint, viewed by TechCrunch, details a trial period where Runlayer granted Rippling access to its roadmap and source code. Both sides signed a mutual non-disclosure agreement. Rippling also agreed not to copy Runlayer’s intellectual property or create derivative works, standard terms in enterprise software trials.
Runlayer states the evaluation involved nearly a year of intensive engineering collaboration. The partnership ended when the two could not agree on a price.
Shortly after, a message from a “Rippling insider” reached Runlayer founder and CEO Andrew Berman. The text claimed the other company was working on a project to build an internal clone. The message described it as almost a 1 to 1 copy of Runlayer.
Runlayer argues Rippling’s product relies on its intellectual property. The lawsuit claims trade secret misappropriation, unfair competition, and breach of contract.
Rippling has confirmed to TechCrunch that it is launching its own MCP gateway. A spokesperson denies the allegations regarding the misuse of Runlayer’s IP.
“Runlayer’s panicked effort to avoid competition by fabricating claims is not an effective way to deal with its business failures. Rippling is launching a superior product for connecting AI tools to business data using only our proprietary information – we have every reason to win in this market,” a Rippling spokesperson told TechCrunch.
Legal representation
Runlayer has retained white-shoe law firm Sullivan & Cromwell. Hiring the firm does not guarantee a win. However, the legal team lends the lawsuit some optical credibility, similar to how a prominent venture capital firm lends a startup credibility.
Market context
The case offers an inside look at the difficulties of selling complex AI infrastructure to other tech companies. Enterprise sales often take a long time to close, frequently depending on deep, hands-on trials.
MCP gateways are becoming crowded. Anthropic launched MCP as an open source protocol in November 2024. It is now a basic building block of AI interoperability, providing a secure way for models and agents to access external data sources and services. Products adding control and security features have grown considerably more competitive since Runlayer launched its product in the middle of last year.
Runlayer raised a total of $42 million, including funding from Khosla Ventures and Felicis.
Even after an intense trial, an enterprise may simply opt to build the tool in-house. Both sides remain stuck in a difficult position.
