Rippling Countersues AI Startup Runlayer for Patent Infringement After Trade Secret Allegations

Rippling Files Patent Infringement Countersuit Against Runlayer

HR startup Rippling filed a lawsuit Monday in U.S. District Court for Delaware accusing AI startup Runlayer of infringing on three of its data-related patents1

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. The case, People Center Inc d/b/a Rippling v. Anysource Inc d/b/a Runlayer, No. 1:26-cv-01007, represents a dramatic escalation in the legal battle between the two companies2

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. Rippling's legal team from Sterne Kessler Goldstein & Fox alleges that Runlayer's platform "infringes Rippling's patents, steals its intellectual property, and drafts off the substantial time and resources Rippling spent developing this technology over the past decade"3

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Runlayer's Original Trade Secret Theft Allegations

The Rippling countersuit comes after Runlayer sued the HR startup last month for breach of contract and trade secret theft1

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. Runlayer, which has raised $42 million and was founded by third-time founder Andrew Berman, accused Rippling of stealing its proprietary technology to build a competing MCP Gateway product1

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. The AI startup alleged that Rippling refused to pay "a market rate" for its platform while "secretly building" a copycat using Runlayer's confidential information during their year-long trial partnership3

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Disputed Insider Warning and MCP Technology at Center of Dispute

The most dramatic element in Runlayer's original lawsuit involved an alleged insider tip from a Rippling employee. Runlayer claimed that on June 12, Tim Fall, an engineer at Rippling, texted Andrew Berman warning: "There's been a project internally to build essentially a clone o[f] Runlayer...It's almost a 1 to 1 copy of Runlayer"1

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. However, Fall has since filed a declaration stating his messages were misconstrued. "Now that I have seen and used Rippling's MCP Gateway, it is clear to me that it is not a 'clone' and did not copy the Runlayer MCP Gateway. I would not make those statements knowing what I know now, as they are not correct," Fall wrote3

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. The dispute centers on Model Context Protocol technology, an open standard that allows AI agents to connect with data and software systems needed to work independently1

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Competing Claims in Intellectual Property Dispute

Rippling accused Runlayer of "free-riding" off its patented software technologies, "causing actual damages in the form of lost sales, lost customers, and price erosion"3

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. A Rippling spokesperson stated: "It takes a certain boldness to accuse a competitor of violating intellectual property laws while infringing on that competitor's inventions. But that's exactly what Runlayer has done here"1

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. Runlayer CEO Andrew Berman fired back, calling the patent infringement lawsuit "a desperate, retaliatory ploy to distract from the fact Rippling misappropriated our proprietary technology"1

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Implications for Enterprise-Startup Relationships in AI Era

The Rippling-Runlayer legal battle serves as a cautionary tale about how relationships between customers and startups can deteriorate in this AI-powered age of rapid product development1

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. Rippling spent nearly a year testing Runlayer's MCP product bundled with AI governance and cybersecurity features like threat detection, but the two companies never agreed on pricing and the trial never converted to a paid contract1

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. Instead, Rippling built its own in-house solution and plans to offer it as a competing product, following its pattern of turning internally used tech into commercial offerings1

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. With AI advances, enterprises have never been more empowered to build proprietary technology in-house, yet they may still put startups through extensive trials before choosing that option1

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. The outcome of this intellectual property dispute could set precedents for how trial partnerships are structured and what protections startups need when sharing technology with potential enterprise customers, especially those backed by investors like tech billionaire Vinod Khosla3

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