Runlayer, a startup that provides a secure Model Context Protocol (MCP) gateway — a standard that enables AI models and agents to securely access external data and tools — has filed a lawsuit against HR software company Rippling, according to the complaint seen by TechCrunch.
The complaint says Rippling acted as a prospective customer and ran an extensive product trial during which Runlayer shared sensitive information, including its product roadmap and portions of source code. The parties executed a mutual non-disclosure agreement, and Rippling signed a product trial agreement containing a clause prohibiting it from copying Runlayer’s intellectual property or creating derivative works, a common provision in enterprise software trials.
Runlayer alleges the evaluation involved “nearly a year of intensive engineering collaboration,” but after the two sides failed to agree on pricing, Runlayer terminated the trial. Shortly thereafter, the complaint recounts, a “Rippling insider” texted Runlayer founder and CEO Andrew Berman claiming there was “a project internally to build essentially a clone o[f] Runlayer … it’s almost a 1 to 1 copy of Runlayer.”
Based on those and related facts, Runlayer contends that Rippling’s product must have been derived from the startup’s confidential information and brings claims for trade secret misappropriation, unfair competition, and breach of contract.
Rippling has confirmed to TechCrunch that it is launching its own MCP gateway but denies Runlayer’s allegations of IP misuse. A Rippling spokesperson told TechCrunch: “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.”
Runlayer has retained Sullivan & Cromwell to represent it in the litigation. While hiring a high-profile law firm does not guarantee success, it can lend a lawsuit a certain degree of credibility in the public eye.
What the dispute reveals about selling AI infrastructure to enterprises
The case highlights the risks startups face when selling complex AI infrastructure to enterprise customers — and especially to other technology companies that have the engineering capacity to build similar systems internally. Enterprise procurement often relies on deep, hands-on trials that expose suppliers’ roadmaps and code to potential customers, which can create opportunities for disputes if negotiations fail.
MCP gateways are an increasingly crowded market. Anthropic released MCP as an open source protocol in November 2024, and it has become a foundational element for AI interoperability by enabling models and agents to access external data sources and services securely. MCP gateway products layer on controls, security, and agent management features, and competition has intensified since Runlayer launched its product in the middle of last year and raised a total of $42 million from investors including Khosla Ventures and Felicis.
Even after lengthy evaluations, some enterprises will choose to implement the tooling in-house rather than purchase a third-party product. That dynamic leaves both vendors and prospective customers in difficult positions: vendors must protect their intellectual property and commercial prospects, while buyers weigh the costs and benefits of building versus buying.
Further developments in the lawsuit will shed light on how courts and companies handle disputes over sensitive technical trials in the fast-evolving AI infrastructure market.
