On Wednesday night, Runlayer and Rippling each withdrew their lawsuits against the other; court documents seen by TechCrunch indicate there was no settlement, no money exchanged, and no lawyers’ fees collected.
Rippling immediately released its MCP gateway product — the same product that lay at the center of the dispute and that competes with Runlayer’s offering.
What was the dispute about?
Runlayer is an early-stage startup that emerged from stealth in November 2025 and has raised $42 million from investors including Khosla Ventures’ Keith Rabois and Felicis. The company is led by Andrew Berman, a third-time founder whose prior ventures include baby monitor maker Nanit and the AI video-conferencing tool Vowel, which sold to Zapier in 2024.
According to Runlayer’s lawsuit, Rippling tested Runlayer’s MCP gateway for more than a year while the two engineering teams worked closely together. Rippling ultimately did not sign on as a customer, Runlayer alleged, and Berman said he received a text from a Rippling employee stating that Rippling was building its own MCP gateway and planned to release it as a product. The message purportedly described Rippling’s product as a clone of Runlayer’s.
Runlayer sued, alleging Rippling violated contractual agreements governing the product tests. An MCP gateway securely handles an enterprise’s AI agent requests for data from other software systems — for example, retrieving candidate details from a recruiting system without granting agents direct access to that system. Such gateways often add features like role-based access control, observability (logs and usage trails), and similar controls.
Rippling counter-sued, alleging Runlayer infringed some of its patents. Runlayer viewed the countersuit as an attempt to pressure them into dropping their case while increasing legal costs.
Outcome and implications
After about three weeks of discovery, Runlayer dropped its suit; Rippling also withdrew its countersuit. Neither side collected a settlement.
Although the public lawsuits ended without financial resolution, the episode underscores a broader point for founders: the AI landscape is evolving so quickly that the lengthy technical evaluations enterprises often impose on startups can become misaligned with enterprise needs and priorities months later.
Products and market positioning
Historically known for payroll and benefits management, Rippling has now entered the AI gateway market with an MCP gateway that can route requests to different models while providing employee-level dashboards for token spend. That product competes with offerings from companies such as Stripe, Ramp, and Databricks.
Rippling’s MCP gateway also positions the company in AI security by tying AI access to employee roles, putting it in competition with Runlayer as well as providers like Docker and Amazon Bedrock.
Runlayer’s proposition is a broader bundle of agent-security services built around its gateway, covering agent creation through detection of shadow AI agents running in an enterprise without IT’s knowledge.
Conclusion
The legal exchange produced no monetary outcome, but it highlights how rapidly relationships and competitive dynamics can shift in the AI market. Startups should be mindful that prospective customers can become competitors and that testing or pilot agreements need careful contractual and intellectual-property protections to account for fast-changing enterprise priorities.
