Runlayer, a startup that provides a secure Model Context Protocol gateway (a standard for AI models and agents to securely ingest external data and tools), has filed a lawsuit against HR software startup Ripling, according to a complaint seen by TechCrunch.
The case is a wake-up call for those who sell AI infrastructure to enterprise customers, especially other technology companies that increasingly have the engineering power to build them themselves.
In its lawsuit, Runlayer describes extensive product trials Rippling conducted as a prospective customer, during which the MCP startup shared everything from its product roadmap to its actual source code. The parties entered into a mutual nondisclosure agreement, and Rippling signed a product trial agreement that included a clause prohibiting copying or creating derivative works of Runlayer’s intellectual property. This is standard boilerplate for enterprise software trials.
Lanlayer said in his complaint that Rippling’s evaluation included “nearly a year of intensive engineering collaboration.” Ultimately, however, the two parties could not agree on a price, and Runlayer ended its trial of the product.
Shortly after, Runlayer claimed that a “controversial insider” sent a text message to Runlayer founder and CEO Andrew Berman informing him of an “internal project to essentially build a clone of Runlayer…that is a nearly 1-to-1 copy of Runlayer.”
Runlayer alleges in its lawsuit that Rippling’s products must be based on the startup’s intellectual property and therefore constitute misappropriation of trade secrets, unfair competition, and breach of contract.
Rippling confirmed to TechCrunch that it is indeed launching its own MCP gateway, but a spokesperson denied Runlayer’s claims that it misused the IP.
“Runlayer’s panicked efforts to fabricate claims and avoid competition is not an effective way to address business failures. Rippling is launching a great product for connecting AI tools to business data using only our own information. We have every reason to win in this market,” a Rippling spokesperson told TechCrunch.
Lanlayer hired the Whiteshoe law firm of Sullivan & Cromwell. That doesn’t mean Runlayer can or should win this case, but just as a big VC gives a startup some credibility, a big law firm gives a lawsuit some credibility, at least on the surface.
What’s even more interesting about this case is that it offers an inside look at the trials and tribulations of selling complex AI infrastructure to businesses, especially other technology companies. Enterprise sales are notoriously slow to close because they often rely on this type of detailed hands-on trial.
MCP gateways in particular are congested. Anthropic announced MCP as an open source protocol in November 2024. Today, MCP is one of the fundamental building blocks for AI interoperability, providing models and agents with a secure way to access external data sources and services. MCP gateway products add controls, security, and other features, especially for agent management, and the field has become much more competitive since Runlayer launched the product in the middle of last year and raised a total of $42 million from the likes of Khosla Ventures and Felicis.
Even after intense trials, companies may simply choose to build the tool in-house. It is sandwiched between rocks and hard spots on both sides.
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