Allegations of Intellectual Property Theft

Runlayer claims that Rippling engaged in nearly a year of intensive engineering collaboration under the guise of a product trial. During this period, Runlayer shared its source code and product roadmap. Despite signing a mutual non-disclosure agreement and a trial contract prohibiting the creation of derivative works or copying intellectual property, Runlayer alleges Rippling built a clone of its technology. This claim was reportedly supported by a text from a Rippling insider to CEO Andrew Berman, who was told an internal project existed to create a near-identical copy of Runlayer's product.

Runlayer, a startup that offers a secure Model Context Protocol gateway — a standard for letting AI models and agents securely pull in outside data and tools — has filed a lawsuit against HR software startup Rippling, according to the complaint seen by TechCrunch. The lawsuit is a cautionary tale for anyone selling AI infrastructure to enterprise customers, especially to other tech companies, that increasingly have the engineering muscle to just build the thing themselves.

In the suit, Runlayer describes an extensive product trial conducted by Rippling as a prospective customer, during which the MCP startup shared everything from its product roadmap to its actual source code. The parties signed a mutual non-disclosure agreement and Rippling signed a product trial agreement with a clause that forbade it from copying Runlayer’s intellectual property or making derivative works, which is standard boilerplate in enterprise software trials.

Runlayer says in the complaint that Rippling’s evaluation involved “nearly a year of intensive engineering collaboration.” But in the end, the two could not agree on a price, so Runlayer ended the product trial.

Rippling's Defense and Market Position

Rippling has confirmed the launch of its own MCP gateway but denies any misuse of intellectual property. A company spokesperson characterized the lawsuit as a fabrication intended to avoid competition following Runlayer's business failures. Rippling asserts that its product was developed using only proprietary information and is superior for connecting AI tools to business data, expressing confidence in its ability to compete and win within this specific market segment.

Shortly after that, Runlayer alleges that a “Rippling insider” texted Runlayer founder and CEO Andrew Berman to inform him of “a project internally to build essentially a clone o[f] Runlayer … it’s almost a 1 to 1 copy of Runlayer.” Runlayer claims in the suit that Rippling’s product must have been based on the startup’s intellectual property and therefore constitutes trade secret misappropriation, unfair competition, and breach of contract. Rippling has confirmed to TechCrunch that it is indeed launching its own MCP gateway, though a spokesperson denies Runlayer’s allegations about misusing its IP.

“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 tells TechCrunch.

Runlayer has retained white-shoe law firm Sullivan & Cromwell.

The MCP Gateway Landscape

Model Context Protocol (MCP) was introduced as an open-source protocol by Anthropic in November 2024 to enable AI agents and models to securely access external tools and data. Runlayer entered this space mid-last year, raising $42 million to develop a gateway that adds security and control features for managing agents. However, the sector has become increasingly crowded and competitive as more firms seek to solve the challenge of AI interoperability.

That doesn’t mean Runlayer will, or even should, win this suit, but the same way a marquee VC lends a startup some credibility, a marquee law firm lends a lawsuit some credibility, at least optically. The more interesting part about this suit is really the inside peek it provides at the trials and tribulations of selling complex AI infrastructure into the enterprise, particularly to other tech companies.

Enterprise Sales Risks

The dispute highlights the inherent dangers startups face when selling complex infrastructure to other technology companies. Enterprise sales cycles are often prolonged and require deep, hands-on trials to close. This process can grant prospective customers—who may possess significant internal engineering capabilities—detailed insight into a startup's inner workings, potentially allowing them to opt for in-house development over a third-party purchase.

Source and methodology

This Intelligence Daily briefing preserves the key facts published by TechCrunch AI and organizes them into a fuller, reader-friendly report. Read the original reporting.