MCP startup Runlayer sues Rippling, alleging stolen product idea

Runlayer, a startup that sells a secure Model Context Protocol (MCP) gateway — a standard letting AI models and agents securely pull in outside data and tools — has sued HR software startup Rippling, according to a complaint seen by TechCrunch. The suit describes an extensive product trial in which Rippling, as a prospective customer, evaluated Runlayer’s technology; Runlayer says it shared its product roadmap and actual source code during the process. The two companies signed a mutual non-disclosure agreement, and Rippling signed a product trial agreement barring it from copying Runlayer’s intellectual property or creating derivative works — standard terms in enterprise software trials.

Runlayer says Rippling’s evaluation involved nearly a year of intensive engineering collaboration, but the two sides could not agree on a price, and Runlayer ended the trial. Runlayer alleges that shortly afterward, a Rippling insider contacted founder and CEO Andrew Berman to say the company was building an internal clone of Runlayer that was nearly an identical copy. Runlayer’s complaint claims Rippling’s product must have drawn on its intellectual property, alleging trade secret misappropriation, unfair competition, and breach of contract.

Rippling has confirmed to TechCrunch that it is launching its own MCP gateway, while a spokesperson denied Runlayer’s allegations: “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.” Runlayer has retained law firm Sullivan & Cromwell for the case, which does not guarantee the outcome but lends the suit some credibility.

The dispute offers a window into the difficulty of selling complex AI infrastructure to enterprise customers — particularly other tech companies with the engineering resources to build competing tools in-house. Anthropic launched MCP as an open-source protocol in November 2024, and it has since become a basic building block of AI interoperability, letting models and agents securely access external data and services; MCP gateway products add control, security, and agent-management features on top. The field has grown 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 months of hands-on evaluation, an enterprise customer may still choose to build the tool itself — a trade-off that leaves vendors and prospective customers alike navigating a difficult position.

Why it matters

The case is a cautionary tale for AI-infrastructure startups selling into enterprise customers that increasingly have the in-house engineering talent to replicate what they’re evaluating — deep technical trials can double as a blueprint for a competing build.