Runlayer Sues Rippling, Alleging It Copied Its AI Infrastructure Product

AI infrastructure startup Runlayer has sued HR software company Rippling, accusing it of using confidential information obtained during an extensive product trial to develop a competing Model Context Protocol gateway.

Runlayer provides a secure MCP gateway, technology designed to help AI models and agents connect with external data, applications and tools while giving enterprises greater control over those connections.

The dispute highlights a growing challenge for startups selling sophisticated AI infrastructure to large businesses, particularly technology companies with engineering teams capable of developing similar products internally.

Runlayer says trial involved extensive technical access

According to Runlayer’s lawsuit, Rippling evaluated its technology as a prospective customer through a lengthy product trial. During that process, Runlayer says it shared detailed information including its product roadmap and source code.

The companies entered into a mutual nondisclosure agreement. At the same time, Rippling also signed a product trial agreement that Runlayer says prohibited copying its intellectual property or creating derivative works based on it.

Runlayer alleges the evaluation eventually developed into “nearly a year of intensive engineering collaboration.” However, the companies ultimately failed to reach an agreement over pricing, prompting Runlayer to end the trial.

Shortly afterwards, Runlayer claims an individual described as a Rippling insider contacted founder and CEO Andrew Berman and told him about an internal project to create what the person characterised as essentially a clone ofRunlayer’ss product.

Based on those circumstances, Runlayer alleges Rippling’s competing gateway was developed using its intellectual property. The lawsuit includes claims involving trade secret misappropriation, breach of contract and unfair competition.

Rippling rejects Runlayer’s allegations.

Rippling has confirmed that it is developing and launching its own MCP gateway but strongly denies usingRunlayer’ss intellectual property to build the product.

A Rippling spokesperson characterised the lawsuit as an attempt to limit competition and said the company’s gateway was created entirely using its own proprietary information.

Rippling also argued that it expects to compete successfully in the market by offering what it considers a stronger product for connecting AI tools with business data.

Runlayer has retained Sullivan & Cromwell to represent it in the dispute. The involvement of a prominent law firm does not determine the merits of the case, but it signals that Runlayer is approaching the legal fight as a significant commercial dispute.

MCP gateway market is becoming increasingly crowded

The lawsuit comes as Model Context Protocol technology becomes an increasingly important part of the AI infrastructure market.

Anthropic introduced MCP as an open source protocol in November 2024. The standard is designed to give AI models and agents a common way to interact with external services and data sources instead of requiring developers to create separate integrations for every system.

MCP gateways build additional enterprise features around that protocol, including security, access controls and tools for managing AI agents. As companies deploy more agents across their operations, demand for such infrastructure has attracted a growing number of competitors.

Runlayer entered the market with its gateway around the middle of last year and has since raised a total of $42 million. Its investors include Khosla Ventures and Felicis.

Lawsuit highlights risks of enterprise AI sales.

Beyond the specific allegations against Rippling, the dispute illustrates a difficult dynamic for AI infrastructure startups selling to technically sophisticated enterprises.

Large software contracts can require months of evaluation before a customer commits to purchasing a product. For complex infrastructure, prospective buyers may also demand substantial technical access and close collaboration with thevendor’ss engineering team to determine whether the software meets their requirements.

That process can expose startups to a dilemma. They may need to reveal enough about their technology to convince a customer to buy it. In contrast, the customer may eventually conclude that developing a similar capability internally makes more financial or strategic sense.

Runlayer’s lawsuit will now test where that boundary lies in this case: whether Rippling independently built a competing MCP gateway, as it maintains, or improperly relied on confidential technology disclosed during its lengthy evaluation of Runlayer’s product.