A US-based AI infrastructure startup has filed a lawsuit against HR software company Rippling, accusing it of stealing proprietary technology after a year-long product trial. Runlayer, which develops secure Model Context Protocol (MCP) gateways, alleges Rippling used confidential information to build a near-identical product following failed commercial negotiations.

Legal dispute over AI infrastructure technology

The complaint, reviewed by TechCrunch, centers on a 2024 product evaluation where Rippling gained access to Runlayer's source code, roadmap, and technical documentation. Both parties signed agreements prohibiting derivative works or IP replication, standard practice in enterprise software trials. Runlayer claims a Rippling insider later confirmed the company was developing "essentially a clone" of its product.

Rippling has acknowledged launching its own MCP gateway but denies misusing Runlayer's intellectual property. A company spokesperson called the lawsuit "a panicked effort to avoid competition," asserting their product was developed independently. The case highlights growing tensions in the AI infrastructure market, where enterprise customers increasingly build in-house solutions rather than license third-party tools.

Market context of the MCP gateway sector

MCP gateways have become critical components of AI interoperability since Anthropic open-sourced the protocol in November 2024. These tools enable secure connections between AI models and external data sources, with enterprise features for agent management. The sector has attracted significant investment, including Runlayer's $42 million funding round led by Khosla Ventures and Felicis.

Legal experts note the case's significance extends beyond the immediate dispute. Runlayer's retention of Sullivan & Cromwell, a prestigious law firm, adds credibility to the lawsuit's optics. The outcome may influence how AI infrastructure companies structure future enterprise trials and protect intellectual property in an increasingly competitive market.

What happens next in the legal battle

The lawsuit remains in its early stages, with no court dates yet scheduled. Industry observers will watch for Rippling's formal legal response and any potential countersuit. The case serves as a cautionary example for AI startups navigating enterprise sales cycles, where lengthy evaluations may create unintended exposure of proprietary technology.