MCP Startup Runlayer Accuses Rippling of Stealing Its Product Idea

A Lawsuit That Highlights the Risks of Selling AI Infrastructure to Enterprise Customers

Runlayer, a startup that offers a secure Model Context Protocol (MCP) gateway, has filed a lawsuit against HR software startup Rippling, alleging that the larger company stole its product idea during an extensive product trial.

The complaint was seen by TechCrunch on July 28, 2026, and represents a cautionary tale for anyone selling AI infrastructure to enterprise customers, especially to other tech companies that increasingly have the engineering muscle to build their own solutions.

The Lawsuit Allegations

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—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.

The Broader Context

"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.

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.

The MCP Gateway Market

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 (2025) and raised a total of $42 million, including from Khosla Ventures and Felicis.

Legal Representation

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 Bottom Line

Both sides are stuck between a rock and a hard place. Even after an intense trial, an enterprise may simply opt to build the tool in-house. This lawsuit serves as a warning for AI infrastructure startups selling to large tech companies that have the resources to develop competing solutions internally.

This story was reported by Julie Bort for TechCrunch.