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. var playerInstance_jwplayer_6a6957aab4b60 = jwplayer( "jwplayer_6a6957aab4b60" ); playerInstance_jwplayer_6a6957aab4b60.setup({ playlist: "https://cdn.jwplayer.com/v2/media/po41mlAK", }); “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. 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.