Runlayer Sues Rippling, Alleges HR Tech Copied Its AI Gateway

Runlayer says an extended evaluation gave Rippling access to internal designs and code that were later used to build a similar Model Context Protocol gateway.

Runlayer, a startup that sells a secure gateway for connecting AI models to external data and services, has filed suit against HR software company Rippling, alleging the larger firm replicated its product after a prolonged trial. The complaint, reviewed by TechCrunch, accuses Rippling of misappropriating trade secrets, violating a non-disclosure pact and breaching the terms of a trial agreement that barred derivative works.

According to the complaint, Runlayer spent months working side-by-side with Rippling engineers during what it calls an evaluation period in which it disclosed product roadmaps, architecture and source code. The startup says the two parties had a mutual confidentiality agreement and a separate trial contract that included standard restrictions against copying proprietary material. After around a year of close engineering engagement, the companies failed to reach a commercial deal and Runlayer says it ended the arrangement. Soon afterward, the suit alleges, a Rippling employee messaged Runlayer’s CEO to describe an internal initiative that closely resembled Runlayer’s system.

Rippling confirmed to TechCrunch that it is preparing to release its own gateway compatible with the Model Context Protocol but rejected the claim that it used Runlayer’s intellectual property. A company spokesperson said Rippling had developed its product using internal work and that competition, not misappropriation, explains the overlap. “We built this independently and intend to compete on the merits,” the spokesperson said in a statement to the reporter.

Legal and industry consultants caution that cases like this are messy. “When a vendor opens up its code and design to a prospective customer, lines can blur between inspiration and copying,” said Maria Chen, who advises tech companies on intellectual property strategy. She added that proving a trade secret was taken and used, rather than informing a buyer’s independent implementation, can be difficult and fact-intensive.

Runlayer has retained Sullivan & Cromwell to pursue the litigation, a move observers say can affect how a complaint is perceived by investors, potential customers and the courts. “Hiring a top-tier litigation firm signals seriousness, but it doesn't guarantee victory,” said a former IP litigator now teaching at a law school. The case will hinge on contract language, technical comparisons of the products and what internal communications reveal about Rippling’s development choices.

The dispute also highlights how fast the market for MCP gateways has evolved. The Model Context Protocol, which a major AI company released as an open standard late last year, has become a common method for letting models and autonomous agents access business data and external tools. Gateway vendors add controls, auditing and agent management features; the field has attracted many entrants since Runlayer introduced its offering in mid-2025 and raised roughly forty-two million dollars — about two-fifths of a hundred million — from venture firms including Khosla and Felicis. For startups, selling deeply technical infrastructure to other technology firms carries special risks: lengthy trials are often necessary to win enterprise business, but they also expose the supplier’s inner workings to customers with the capability to build their own solutions.

Both sides face trade-offs. For vendors, an intensive demonstration can win a contract or seed a competitor; for sophisticated buyers, building internally can avoid vendor lock-in but costs engineering time. The suit will test how courts balance those commercial realities with contract protections and trade secret law.