AI Startup Runlayer Sues Rippling for Allegedly Cloning Its Product After Year-Long Trial

MCP startup Runlayer accuses Rippling of stealing its product idea

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. 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 spokespeson tells TechCrunch. Runlayer has retained white-shoe law firm Sullivan & Cromwell. 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 notoriously take a long time to close, often because they hinge on this kind of deep, hands-on trial. MCP gateways in particular are getting crowded. Anthropic launched MCP as an open-source protocol in November 2024. It's now one of the basic building blocks 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 managing agents, and the field has grown considerably more competitive since Runlayer launched its product in the middle of last year and raised a total of $42 million, including from Khosla Ventures and Felicis. Even after an intense trial, an enterprise may simply opt to build the tool in-house. Both sides are stuck between a rock and a hard place.

AI startup Runlayer sues HR technology firm Rippling for allegedly stealing trade secrets

July 28 (Reuters) - Artificial intelligence cybersecurity startup Runlayer sued HR technology firm Rippling in Manhattan federal court on Tuesday for allegedly stealing its trade secrets to build a competing product. Runlayer accused Rippling in the complaint, opens new tab of misusing its secrets after licensing its software to create what a Rippling employee allegedly called a "clone" of Runlayer's platform. Spokespeople for Rippling did not immediately respond to a request for comment. "Runlayer invests heavily in its innovations and proprietary technologies and will vigorously ⁠defend its intellectual property," Runlayer CEO Andrew Berman said in a statement. New York-based Runlayer is backed by investors including Khosla Ventures and Felicis. Its platform monitors and controls how AI agents access enterprise software systems. Rippling, which provides HR and workforce-management software, entered an agreement to try out Runlayer's software last year to manage its AI systems, the complaint said. Runlayer said it suspended its services to Rippling in June after they could not reach a long-term agreement. According to the complaint, a Rippling "insider" later ⁠told Runlayer that there was a "project internally to build essentially a clone" of Runlayer that was "almost a 1 to 1 copy." Runlayer asked the court to block Rippling from misusing its trade secrets or selling a competing product and requested an unspecified amount of monetary ⁠damages. Rippling is also embroiled in a legal dispute with HR software rival Deel over accusations that Deel used a former Rippling company employee as a spy to steal its trade secrets. ⁠The employee confessed in an Irish court last year to spying for Deel. Deel has denied the allegations and countersued Rippling for alleged racketeering and unfair competition. The case ⁠is Runlayer v. Rippling, U.S. District Court for the Southern District of New York, No. 1:26-cv-06410. For Runlayer: Andrei Iancu, Alexander Gross and Amy Proctor of Sullivan & Cromwell For Rippling: attorney information not yet available (This story has been repeated with no changes to the text.) Reporting by Blake Brittain in Washington Our Standards: The Thomson Reuters Trust Principles., opens new tab * Suggested Topics: * Default Blake Brittain Thomson Reuters Blake Brittain reports on intellectual property law, including patents, trademarks, copyrights and trade secrets, for Reuters Legal. He has previously written for Bloomberg Law and Thomson Reuters Practical Law and practiced as an attorney.

NYC AI startup backed by tech billionaire Khosla sues Rippling over trade secret theft

A New York-based AI startup is suing Rippling - a Silicon Valley software giant that got a $3 million tax break from Gov. Kathy Hochul - for allegedly stealing its trade secrets to "build essentially a clone" of its safety and governance product, The Post has learned. Runlayer - an AI security firm backed by tech billionaire Vinod Khosla - alleged Rippling violated its confidentiality agreements during a nearly year-long commercial partnership, according to a lawsuit filed Tuesday in the Southern District of New York. Talks to extend their partnership fell apart earlier this summer when Rippling refused to pay "a market rate" for Runlayer's platform - while in the background, it was "secretly building" its own competing AI product using Runlayer's confidential information, the lawsuit alleged. Runlayer alleged it was tipped off on June 12 when an insider at Rippling texted Runlayer CEO Andrew Berman: "There's some things happening on the Rippling side that you should probably know about but I didn't want to put them in Slack." "There's been a project internally to build essentially a clone o[f] Runlayer," the insider wrote, according to the lawsuit. "It's not feature complete by any means but it's almost a 1 to 1 copy of Runlayer." According to the suit, the insider also suggested that Rippling CEO Parker Conrad was potentially behind the duplicate product, writing: "it smells like a Parker thing." Runlayer is seeking a jury trial, along with damages, attorney's fees and a preliminary injunction blocking Rippling from developing or selling a product designed with its trade secrets. Rippling did not immediately respond to The Post's request for comment. Anysource, Inc., which does business as Runlayer and claims to help companies securely become AI natives, has raised $42 million from investors including Khosla Ventures and Felicis, a Californian venture capital firm, since it was founded just under a year ago. Despite substantial backing, the New York City startup - which at the time employed just five workers - allegedly jumped at the chance to partner with Rippling, a software company worth roughly $16 billion, the lawsuit said. Rippling is based in San Francisco but also has New York offices. In December 2025, it was awarded $3.4 million in tax credits from Hochul to support its plans to expand its Manhattan presence, adding 371 new full-time jobs. During their nearly year-long partnership, Runlayer disclosed extensive trade secrets, including its source code and "Gateway deployment architecture," subject to strict confidentiality agreements that prevented Rippling from using the information to "copy" or "create derivative works," according to the suit. After negotiations to continue their relationship failed, Runlayer suspended services to Rippling on June 12 - alleging it learned later that day that the company was building a competing AI governance platform of its own, the suit said. The lawsuit alleged Rippling is specifically preparing to launch a competing MCP Gateway, based on an unsolicited screenshot from a third party sent to Runlayer on July 1. A Gateway sits between AI models and their MCP servers, allowing AI agents access to plenty of tools and data while maintaing a secure governance layer. Since it suspended access to its pilot products, Runlayer alleged it has identified a series of Rippling job postings that align with some of the confidential information Runlayer had spent nearly a year disclosing, according to the suit.