Runlayer, a startup that offers a secure Model Context Protocol gateway, a standard to allow AI models and agents to securely obtain external data and tools, has filed a lawsuit against human resources software startup Rippling, according to the complaint seen by TechCrunch.

The lawsuit is a warning to anyone selling AI infrastructure to enterprise customers, especially other technology companies, which increasingly have the engineering capacity to build it themselves.

In the lawsuit, Runlayer describes an extensive product test conducted by Rippling as a potential customer, during which the MCP startup shared everything from its product roadmap to its actual source code. The parties signed a mutual confidentiality agreement, and Rippling signed a product testing agreement with a clause prohibiting him from copying Runlayer’s intellectual property or making derivative works, which is a standard in enterprise software testing.

Runlayer says in the complaint that Rippling’s evaluation involved “nearly a year of intense engineering collaboration.” But in the end, the two couldn’t agree on the price, so Runlayer ended testing the product.

Shortly after that, Runlayer alleges that a “Rippling insider” texted Runlayer founder and CEO Andrew Berman to inform him of “an internal project to essentially build a clone of[f] Runlayer… is almost a 1 to 1 copy of Runlayer.”

Runlayer claims in the lawsuit 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, although a spokesperson denies Runlayer’s allegations of misusing its IP.

“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 to connect AI tools to business data using only our proprietary information; we have every reason to win in this market,” a Rippling spokesperson told TechCrunch.

Runlayer has retained the law firm Sullivan & Cromwell. That doesn’t mean Runlayer will, or even should, win this lawsuit, but in the same way that a marquee VC lends some credibility to a startup, a marquee law firm lends some credibility to a lawsuit, at least optically.

The most interesting part of this lawsuit is really the inside look it offers at the trials and tribulations of selling complex AI infrastructure to the enterprise, particularly to other technology companies. Enterprise sales notoriously take a long time to close, often because they rely on this type of in-depth, hands-on testing.

MCP gateways in particular are becoming saturated. Anthropic released MCP as an open source protocol in November 2024. It is now one of the 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 agent management, and the field has become considerably 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 intense testing, a company may simply choose to develop the tool in-house. Both sides are caught between a rock and a hard place.