MCP Startup Runlayer Sues Rippling Over Alleged Product Copying

Runlayer, a startup that provides a secure Model Context Protocol (MCP) gateway — a standard for AI models and agents to safely access external data and tools — has filed a lawsuit against HR software company Rippling, according to a complaint obtained by TechCrunch. The lawsuit serves as a cautionary tale for anyone selling AI infrastructure to enterprise customers, especially other tech companies that may have the engineering resources to build similar products internally.

In the suit, Runlayer describes an extensive product trial conducted by Rippling as a prospective customer. During the trial, the startup shared everything from its product roadmap to source code under a mutual non-disclosure agreement and a product trial agreement prohibiting copying or creating derivative works. Runlayer says the evaluation involved “nearly a year of intensive engineering collaboration.” However, the parties could not agree on a price, and Runlayer ended the trial.

Shortly after, Runlayer alleges that a “Rippling insider” texted founder and CEO Andrew Berman about an internal project to build “essentially a clone” of Runlayer’s product, calling it “almost a 1 to 1 copy.” Runlayer claims this constitutes trade secret misappropriation, unfair competition, and breach of contract.

Rippling confirmed to TechCrunch that it is launching its own MCP gateway but denied the allegations. A spokesperson said, “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.” Runlayer has retained the law firm Sullivan & Cromwell.

The MCP gateway market has become increasingly competitive. Anthropic launched MCP as an open-source protocol in November 2024, and it is now a foundational element for AI interoperability. Runlayer launched its product in mid-2025 and has raised a total of $42 million from investors including Khosla Ventures and Felicis.

This lawsuit highlights the challenges of selling complex AI infrastructure to enterprises, particularly other tech companies. Enterprise sales often hinge on lengthy, hands-on trials, but customers may ultimately choose to build the technology in-house, leaving vendors in a difficult position.