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

Now Rippling is counter suing tiny startup Runlayer

HR startup Rippling filed a lawsuit Monday accusing MCP gateway startup Runlayer of infringing on three of its patents, according to the lawsuit seen by TechCrunch. The filing comes after Runlayer sued the HR startup last month, accusing it of breach of contract and stealing its product ideas. It's the latest saga between the two companies after Rippling spent nearly a year testing the startup's MCP product. The two companies never agreed on a price, and the trial never turned into a paid contract. Instead, Rippling built its own MCP server, and will soon offer it as a product that competes with Runlayer. (Rippling often turns its internally used tech into products, like its recently released AI Spend Console.) Their battle serves as a warning of how the relationship between customers and startups can devolve in this AI-powered age of fast product building. Runlayer, which launched its product about a year ago, bundles an MCP gateway with cybersecurity features like threat detection. MCP is an open standard that allows AI agents to connect with data and software systems needed to work independently. Runlayer has raised a total of $42 million and was founded by third-time founder Andrew Berman. (His previous companies were baby-monitor maker Nanit and an AI video conferencing tool, Vowel, that sold to Zapier in 2024). Rippling became one of Runlayer's earliest potential customers trialing its software. The most dramatic detail in the lawsuit is Runlayer's claim that a Rippling employee reached out to Berman to warn him that his employer was building a "copy" of Runlayer's product. A Rippling spokesperson tells TechCrunch that its employee has since revised that view. On Rippling's side, perhaps the most dramatic claim is that it informed Runlayer of the patents it believed Runlayer had infringed soon after the startup filed its lawsuit. One might infer that the suit is intended as leverage to bring Runlayer to the settlement table. Indeed, that's how Runlayer views it. "This is a desperate, retaliatory ploy to distract from the fact Rippling misappropriated our proprietary technology. We clearly have a standout AI product that has nothing to do with these patents. No attempt to bully or distract will prevent us from protecting our IP and continuing to innovate and create the best product for our fast-growing customer base," Berman said in a written statement. Rippling loves a good fighting-words statement too. Its spokesperson told TechCrunch: "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. Rippling's lawsuit calls out Runlayer's hypocrisy. Having manufactured claims against Rippling to distract from its business failures, it now has to face a lawsuit for repeatedly copying Rippling's inventions in building its own products." Now it's up to the courts to unwind who did what to whom, unless the parties settle. But these dueling cases still serve as a buyer- and seller-beware warning. With AI advances, enterprises have never before been more empowered to build tech in-house. Yet they still may put a startup through its paces before choosing that option.

Rippling sues AI startup Runlayer for infringing data patents

Aug 10 (Reuters) - HR technology firm Rippling sued AI startup Runlayer in Delaware federal court on Monday for allegedly infringing its data-related patents. The case is People Center Inc d/b/a Rippling v. Anysource ⁠Inc d/b/a Runlayer, U.S. District Court for the District of Delaware, No. 1:26-cv-01007. For Rippling: Daniel Block, Michael Specht and Jonathan ⁠Tuminaro of Sterne Kessler Goldstein & Fox For Runlayer: attorney information not yet available AI startup Runlayer sues HR technology firm Rippling for allegedly stealing trade secrets Reporting by Blake Brittain in Washington Our Standards: The Thomson Reuters Trust Principles., opens new tab * Suggested Topics: * Litigation * Data Privacy * Corporate Counsel * Intellectual Property 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.

Rippling hits back at NYC AI startup's trade secret lawsuit in messy legal battle

HR software giant Rippling is hitting back at a lawsuit from NYC AI startup Runlayer, which accused the rival of stealing its trade secrets - alleging in a separate complaint that it was actually Runlayer who mimicked its patented technology. 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," states a complaint filed Monday in US District Court for Delaware. It accused Runlayer - which is backed by tech billionaire Vinod Khosla - of "free-riding" off of its patented software technologies, "causing actual damages in the form of lost sales, lost customers, and price erosion." In separate court filings, Rippling also denied the claims in Runlayer's lawsuit last month, which alleged Rippling stole the smaller firm's trade secrets to "build essentially a clone" of its safety and governance product during their commercial partnership. "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," a spokesperson for Rippling told The Post. "Having manufactured claims against Rippling to distract from its business failures, it now has to face a lawsuit for repeatedly copying Rippling's inventions in building its own products." Runlayer responded that Rippling's lawsuit is simply retaliation and an attempt to distract from the original litigation. "This is a desperate, retaliatory ploy to distract from the fact Rippling misappropriated our proprietary technology," Andrew Berman, CEO and co-founder of Runlayer, told The Post. "We clearly have a standout AI product that has nothing to do with these patents. No attempt to bully or distract will prevent us from protecting our IP and continuing to innovate and create the best product for our fast-growing customer base." In Runlayer's original complaint, it alleged talks with Rippling fell apart when the company refused to pay "a market rate" for its platform - while in the background, it was "secretly building" a copycat using Runlayer's confidential information. Runlayer alleged it was tipped off on June 12 when an insider at Rippling texted Berman: "There's been a project internally to build essentially a clone o[f] Runlayer...It's not feature complete by any means, but it's almost a 1 to 1 copy of Runlayer." The suit specifically alleged Rippling is preparing to launch a competing a MCP Gateway that provides an extra governance layer that sits between AI models and their servers. But in a new court filing, Tim Fall, the alleged insider who texted Berman and an engineer at Rippling who has been with the company for one and a half years, said his messages were being 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 wrote in his declaration. "I was disappointed to learn that Runlayer disclosed those messages in litigation without my knowledge or permission, and without ever contacting to [sic] me to understand what I meant when I sent them," he added. He said he does not recall receiving "any source code, system architecture, or back-end details for the Runlayer MCP Gateway" during the entirety of Rippling's relationship with Runlayer. A source familiar with the case told The Post that Rippling "did not invent anything in the MCP industry, so their arguments don't really work here. The patents simply don't apply." In an opposition filing last Friday, Rippling argued that with "Mr. Fall's imprecise text message debunked, Runlayer's case collapses." "First, there is no evidence - none - that Runlayer shared trade secrets with Rippling," Rippling wrote in the filing. "Second, there is no evidence that Rippling used any Runlayer trade secrets."