HR technology firm Rippling has initiated legal proceedings against MCP gateway startup Runlayer, alleging that Runlayer has infringed on three of its patents, as reported in a recent lawsuit document.
This development follows a lawsuit filed by Runlayer against Rippling last month, wherein Runlayer accused Rippling of breaching their contract and appropriating their product concepts.
This ongoing conflict stems from Rippling’s nearly year-long trial of Runlayer’s MCP product, which ultimately did not lead to a contractual agreement due to disagreements over pricing. As a result, Rippling developed its own version of an MCP server, which it plans to launch as a competing product. The firm often converts its internally used technology into marketable products, much like its new AI Spend Console.
This legal battle highlights the challenges that can arise between clients and startups in this rapidly evolving AI-driven landscape.
Runlayer, which introduced its product around a year ago, integrates cybersecurity features such as threat detection within its MCP gateway. The MCP standard enables AI agents to autonomously interact with necessary data and software systems.
Having raised $42 million, Runlayer was founded by entrepreneur Andrew Berman, who previously launched companies like the baby monitor brand Nanit and the AI video conferencing platform Vowel, which was sold to Zapier in 2024. Rippling was among the initial customers testing Runlayer’s software.
One notable claim from Runlayer’s lawsuit alleges that a Rippling employee contacted Berman to alert him that Rippling was developing a product similar to Runlayer’s. In response, a Rippling representative stated that the employee’s perspective has since changed.
On Rippling’s end, a striking claim is that the company promptly notified Runlayer of the patents it believed were being infringed upon following Runlayer’s lawsuit launch.
This legal action appears to be a strategy aimed at pressuring Runlayer into a settlement, something Runlayer believes is the case.
In a written statement, Berman described the lawsuit as a “desperate, retaliatory strategy” intended to divert attention from Rippling’s alleged misuse of their proprietary technology. He expressed confidence that their innovative AI product is distinct from the contested patents and emphasized their commitment to safeguarding intellectual property and enhancing their offerings for their expanding client base.
Rippling also had strong words in response, with its spokesperson stating, “It requires audacity to accuse a rival of intellectual property violations while infringing upon that rival’s creations. Runlayer’s actions exemplify this hypocrisy. They have fabricated accusations against Rippling to divert attention from their own shortcomings and must now confront a lawsuit for allegedly imitating Rippling’s inventions in their products.”
The resolution of this dispute now lies with the judicial system, unless both parties opt for a settlement. This exchange of lawsuits serves as a cautionary tale for stakeholders to remain vigilant. Although AI advancements empower companies to develop technologies internally, they might still consider rigorous evaluations of startups before taking that approach.
