Runlayer Accuses Rippling of Stealing Its Product Idea

Runlayer, a startup providing a secure Model Context Protocol gateway—a standard enabling AI models and agents to safely access external data and tools—has filed a lawsuit against HR software company Rippling, according to a complaint reviewed by TechCrunch.

This legal action serves as a warning for companies selling AI infrastructure to enterprise clients, particularly tech firms with the engineering resources to build similar solutions in-house.

According to the lawsuit, Runlayer conducted an extensive product trial with Rippling, a prospective customer. During this process, the MCP startup shared details ranging from its product roadmap to its actual source code. The parties executed a mutual non-disclosure agreement, and Rippling signed a product trial agreement containing standard boilerplate clauses prohibiting the copying of Runlayer’s intellectual property or the creation of derivative works.

Runlayer alleges in the complaint that Rippling’s evaluation involved “nearly a year of intensive engineering collaboration.” However, the two companies failed to reach an agreement on pricing, leading Runlayer to terminate the product trial.

Shortly thereafter, Runlayer claims that a “Rippling insider” texted Runlayer founder and CEO Andrew Berman to report “an internal project to build essentially a clone o[f] Runlayer … it’s almost a 1 to 1 copy of Runlayer.”

Runlayer asserts in the lawsuit that Rippling’s product must have been derived from its intellectual property, constituting trade secret misappropriation, unfair competition, and breach of contract.

Rippling has confirmed to TechCrunch that it is launching its own MCP gateway, though a spokesperson denies Runlayer’s allegations regarding the misuse of intellectual property.

“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.

Runlayer has hired the prestigious law firm Sullivan & Cromwell. This does not guarantee a victory for Runlayer, but just as a top-tier venture capital firm lends credibility to a startup, a prominent law firm lends optical credibility to a lawsuit.

The more compelling aspect of this lawsuit is the insight it offers into the challenges of selling complex AI infrastructure to enterprises, especially other technology companies. Enterprise sales are notoriously lengthy, often depending on deep, hands-on trials.

MCP gateways are becoming increasingly crowded. Anthropic introduced MCP as an open-source protocol in November 2024. It has since become a fundamental component of AI interoperability, providing models and agents with a secure method to access external data sources and services. MCP gateway products enhance control, security, and other features, particularly for managing agents, and the market has grown significantly more competitive since Runlayer launched its product mid-last year and raised $42 million, including investments from Khosla Ventures and Felicis.

Even after an intensive trial, an enterprise may choose to build the tool internally. Both parties are caught in a difficult position.