Runlayer, a startup that offers a secure gateway to the Model Context Protocol — a standard for allowing AI models and agents to securely pull in external data and tools — has filed a lawsuit against HR software startup Rippling, according to the complaint seen by TechCrunch.
The lawsuit serves as a cautionary tale for anyone selling AI infrastructure to enterprise customers, and especially to other technology companies, which increasingly have the engineering muscle to build the thing themselves.
In the lawsuit, Runlayer describes an extensive product trial conducted by Rippling as a potential customer, in 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 prohibiting it from copying Runlayer’s intellectual property or making derivative works, which is standard in enterprise software trials.
Rippling’s evaluation included “nearly a year of extensive engineering collaboration,” Runlayer says in the complaint. But in the end, the two couldn’t agree on a price, so Runlayer ended the trial of the product.
Shortly thereafter, Runlayer allegedly sent a Rippling insider a text message to Runlayer founder and CEO Andrew Berman informing him of an “internal project to build a clone of the operating system.”[f] Runlayer…it’s almost a 1-to-1 copy of Runlayer.
Runlayer claims in the lawsuit that Rippling’s product should be based on the startup’s intellectual property and thus constitutes trade secret misappropriation, unfair competition, and breach of contract.
Rippling confirmed to TechCrunch that it is indeed launching its own MCP portal, though a spokesperson denies Runlayer’s claims about misuse of its IP.
“Rippling’s panicked efforts to avoid competition by fabricating claims is not an effective way to deal with its business failures. Rippling is launching a premium product to connect AI tools to business data using only our proprietary information — we have every reason to win in this market,” a Rippling spokesperson told TechCrunch.
Runlayer retained white-shoe law firm Sullivan & Cromwell. This doesn’t mean that Runlayer will, or even should, win this lawsuit, but in the same way that a prominent venture capitalist gives a startup some credibility, a prominent law firm gives a lawsuit some credibility, at least visually.
The most interesting part about this suit is actually the inside peek it provides into the trials and tribulations of selling complex AI infrastructure in the enterprise, especially to other technology companies. Enterprise sales are known to take a long time to close, often because they hinge on this kind of deep hands-on experience.
The MCP portals in particular have become crowded. Anthropic launched MCP as an open source protocol in November 2024. It is now one of the core elements of AI interoperability, giving models and agents a secure way to access external data sources and services. MCP gateway products add control, security and other features, especially for agent management, and this field has become considerably more competitive since Runlayer launched its product in the middle of last year and has amassed a total of 42 million dollarsincluding from Khosla Ventures and Felicis.
Even after extensive experimentation, an organization may simply choose to build the tool in-house. Both sides are stuck between a rock and a hard place.
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