Runlayer and Rippling filed lawsuits against one another on Wednesday night. No settlement was reached. No money changed hands. Court documents show not even lawyers’ fees were paid.
Rippling responded immediately by launching its own MCP gateway. This product is the focus of the legal battle and sits in direct competition with Runlayer’s offering.
The public dispute serves as a warning for founders. In the current era of artificial intelligence, building new software has become almost trivial. You never know who your next competitor will be. It might even be a prospective customer.
Runlayer is an early-stage startup that launched out of stealth in November 2025. It has raised a total of $42 million from investors including Keith Rabois of Khosla Ventures and Felicis. Third-time founder Andrew Berman leads the company. His previous ventures include the baby-monitor maker Nanit and an AI video conferencing tool called Vowel, which sold to Zapier in 2024.
After Rippling tested Runlayer’s MCP gateway for more than a year, the two engineering teams worked closely together. Runlayer claims Rippling never signed on to become a customer. Instead, Berman received a text from a Rippling employee stating his employer was building its own MCP gateway and planned to release it as a product. The employee described Rippling’s product as a clone of Runlayer’s.
Runlayer sued, claiming Rippling violated contractual agreements covering the tests of its products.
An MCP gateway securely handles an enterprise’s AI agent requests for data from other software systems. For example, when a hiring professional asks for details on the top five candidates for a job, including their emails, that data must be retrieved from the company’s recruitment system. The gateway handles the retrieval process rather than granting agents direct access to the company’s software systems. It can then layer on other features like employee role-based access control, where managers get different access than interns, and observability, which provides logs and usage trails.
Rippling countersued, alleging that Runlayer was violating some of its patents. Runlayer viewed this move as a tactic to induce it to drop its suit while ratcheting up legal expenses.
Runlayer dropped its suit after spending the last three weeks in discovery. Rippling also dropped its own suit and again, did not collect a settlement.
While the lawsuits did not lead to anything but a lot of public flaming, there is a deeper takeaway for founders. The AI landscape is changing so rapidly that the long-running technical shoot-outs that enterprises love to impose on startups need to be rethought. Between the time an AI startup enters into one and however-many months later, an enterprise’s needs and desires may have drastically changed.
In the meantime, in the span of weeks, Rippling, whose bread and butter has historically been payroll and benefits management, has now entered the AI Gateway market with a tool that can route to different models while dashboarding token spend by employee. The product is competing with the likes of Stripe, Ramp and Databricks.
Now Rippling is also in the AI security business with this MCP gateway that ties AI access to employee roles. It competes with the likes of Runlayer, Docker and Amazon Bedrock.
As for Runlayer, its pitch is a broader bundle of agent security services tied to the gateway, ranging from agent creation to spotting shadow AI agents running in an enterprise unbeknownst to IT.
What it means
Founders must assume any potential client could become a rival overnight. Large organisations can absorb testing periods, replicate features internally, and launch competing products before a contract is ever signed. Legal disputes over proprietary code or data access are becoming less effective as a shield against market entry.
