AI infrastructure startup Runlayer filed a lawsuit against HR software company Rippling in 2026, alleging that Rippling used confidential information shared during a product trial to build a competing Model Context Protocol (MCP) gateway — a tool that allows AI models and agents to securely access external data and services.
According to the complaint, Rippling evaluated Runlayer’s product as a prospective customer over what Runlayer describes as “nearly a year of intensive engineering collaboration.” During that period, Runlayer shared its product roadmap and source code under a mutual non-disclosure agreement. A separate trial agreement also included a clause prohibiting Rippling from copying Runlayer’s intellectual property or creating derivative works. The two companies ultimately failed to agree on pricing, and Runlayer ended the trial.
Shortly afterward, Runlayer CEO Andrew Berman allegedly received a text from a “Rippling insider” warning him that Rippling had launched an internal project to build “essentially a clone” of Runlayer’s product — described as “almost a 1 to 1 copy.” Runlayer’s lawsuit claims trade secret misappropriation, unfair competition, and breach of contract.
Rippling confirmed to TechCrunch that it is launching its own MCP gateway in 2026, but denied the allegations. “Runlayer’s panicked effort to avoid competition by fabricating claims is not an effective way to deal with its business failures,” a Rippling spokesperson said. “Rippling is launching a superior product for connecting AI tools to business data using only our proprietary information.”
Runlayer has retained law firm Sullivan & Cromwell to handle the case. The startup has raised $42 million to date, with backing from Khosla Ventures and Felicis.
The case highlights a risk inherent in enterprise AI sales: deep product trials often require sharing sensitive technical details, yet a prospective customer may ultimately choose to build the technology in-house. The MCP gateway market has grown increasingly competitive since Anthropic open-sourced the MCP protocol in November 2024.
Source: TechCrunch