Runlayer, a nascent company specializing in a secure Model Context Protocol (MCP) gateway—a standardized mechanism enabling AI models and agents to safely integrate external data and tools—has initiated legal proceedings against HR software innovator, Rippling. This development comes from a complaint reviewed by TechCrunch.
This lawsuit serves as a significant cautionary tale for any entity providing AI infrastructure to enterprise clients, particularly to fellow technology firms that increasingly possess the internal engineering capacity to develop such solutions themselves.
According to the suit, Runlayer details an extensive product trial undertaken by Rippling as a prospective client. During this period, the MCP startup reportedly shared a wide array of proprietary information, ranging from its strategic product roadmap to its actual source code. Both parties had executed a mutual non-disclosure agreement (NDA), and Rippling further signed a product trial agreement that explicitly prohibited the copying of Runlayer’s intellectual property or the creation of derivative works—a standard contractual provision in enterprise software evaluations.
Runlayer asserts in its complaint that Rippling's evaluation process involved "nearly a year of intensive engineering collaboration." However, the two companies ultimately failed to reach a consensus on pricing, prompting Runlayer to terminate the product trial.
Shortly thereafter, Runlayer alleges that an "insider" at Rippling contacted Runlayer's founder and CEO, Andrew Berman, via text message. This individual reportedly informed Berman of "a project internally to build essentially a clone o[f] Runlayer … it’s almost a 1 to 1 copy of Runlayer."
In its legal filing, Runlayer contends that Rippling’s subsequent product must have been derived from the startup's intellectual property, thereby constituting trade secret misappropriation, unfair competition, and a breach of contract.
Rippling has confirmed to TechCrunch its plans to launch its own MCP gateway. However, a company spokesperson vehemently denies Runlayer’s allegations regarding the misuse of its 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 conveyed to TechCrunch.
Runlayer has engaged the services of the prestigious "white-shoe" law firm Sullivan & Cromwell. While this does not guarantee Runlayer's victory or even imply it should prevail, the retention of a marquee law firm, much like a prominent venture capitalist backing a startup, lends a certain level of credibility to the lawsuit, at least from an optical perspective.
Beyond the immediate dispute, a more compelling aspect of this lawsuit is the rare glimpse it offers into the inherent challenges and complexities of selling sophisticated AI infrastructure to enterprise clients, particularly other technology companies. Enterprise sales are notoriously protracted, often hinging on these types of deep, hands-on product trials.
The market for MCP gateways, in particular, is experiencing rapid growth and increasing congestion. Anthropic notably introduced MCP as an open-source protocol in November 2024, establishing it as a fundamental building block for AI interoperability by providing a secure channel for models and agents to access external data and services. MCP gateway products augment these capabilities with enhanced control, security, and agent management features. The competitive landscape has intensified considerably since Runlayer launched its product in mid-last year and successfully secured a total of $42 million in funding, with investments from firms like Khosla Ventures and Felicis.
Ultimately, even after undergoing an intensive trial period, an enterprise client may still opt to develop the required tool in-house. This scenario presents a difficult predicament for both the vendor and the prospective customer.
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