Runlayer, a startup providing a secure gateway for the Model Context Protocol (MCP) that allows AI models and agents to safely access external data and tools, has initiated legal action against HR software company Rippling, as highlighted in a complaint reviewed by TechCrunch.
This lawsuit serves as a warning for companies offering AI infrastructure to enterprise clients, particularly tech firms that often possess the capability to develop similar solutions in-house.
According to the lawsuit, Runlayer engaged in a substantial product trial with Rippling as a potential client, sharing everything from its product development roadmap to its actual source code. Both companies entered into a mutual non-disclosure agreement, and Rippling signed a trial agreement that included clauses preventing the appropriation of Runlayer’s intellectual property or the creation of derivative works—common stipulations in enterprise software trials.
Runlayer asserts that this trial involved “almost a year of exhaustive engineering collaboration.” However, the two companies were unable to reach an agreement on pricing, prompting Runlayer to terminate the trial.
Following this, Runlayer claims that a “Rippling insider” contacted founder and CEO Andrew Berman to inform him of an internal initiative to develop a product closely resembling Runlayer’s offerings, describing it as “almost a 1 to 1 copy of Runlayer.”
The lawsuit accuses Rippling of trade secret misappropriation, unfair competition, and breach of contract, maintaining that the new product appears to be based on Runlayer’s intellectual property.
Rippling has acknowledged to TechCrunch the intention to launch its own MCP gateway, albeit a spokesperson rebuffed Runlayer’s claims of intellectual property misuse.
“Runlayer’s desperate attempt to evade competition by inventing allegations doesn’t address its business setbacks. Rippling is set to introduce a superior product that connects AI tools to business data using solely our proprietary information—we are confident in our position within this market,” remarked a Rippling spokesperson.
Runlayer has engaged the prestigious law firm Sullivan & Cromwell. While this association does not guarantee victory in the lawsuit, similar to how an esteemed venture capital firm can bolster a startup’s credibility, a notable law firm can lend some initial legitimacy to a lawsuit.
What makes this lawsuit particularly intriguing is the insight it offers into the challenges of marketing complicated AI infrastructure to enterprises, especially tech firms. Enterprise sales are renowned for being lengthy processes, often because they rely heavily on extensive hands-on trials.
The market for MCP gateways is becoming increasingly saturated. Anthropic introduced MCP as an open-source protocol in November 2024, establishing it as a fundamental component of AI interoperability. This allows models and agents a reliable way to access outside data sources and services. MCP gateway solutions enhance control, security, and various features, particularly for managing agents, with the competitive landscape becoming much more fierce since Runlayer debuted its product last year, securing $42 million in funding from sources including Khosla Ventures and Felicis.
Even after an exhaustive trial, enterprises may choose to develop similar tools internally. This creates a challenging situation for both parties involved.
