Two Tech Companies Are Suing Each Other Over a New AI Tool Standard

Rippling filed a patent infringement lawsuit against a smaller startup called Runlayer on August 10, 2026, accusing it of copying three of Rippling's patented inventions. This came two weeks after Runlayer sued Rippling in a New York federal court, claiming Rippling stole its trade secrets and broke a contract (TechCrunch).

Runlayer filed its original complaint on July 28, 2026, accusing Rippling of stealing its product ideas to build a competing version of the same technology (Reuters). The case is described as the first lawsuit over intellectual property involving something called MCP, or the Model Context Protocol (Yahoo Finance).

MCP is an open standard that lets AI agents connect with the data and software they need to work on their own. A simple way to think about it: MCP is like a universal plug adapter. Instead of needing a different cable for every device an AI assistant might want to use, MCP provides one shared connection point so the AI can reach databases, apps, and other tools through a single interface.

Runlayer is a New York City-based startup backed by billionaire investor Vinod Khosla and has raised $42 million in total. The company launched its product about a year before the August 2026 lawsuit. Runlayer's product combines an MCP gateway with cybersecurity features like threat detection. Its founder, Andrew Berman, has started three companies; his earlier ones were baby-monitor maker Nanit and a video conferencing tool called Vowel, which was sold to Zapier in 2024 (TechCrunch).

The relationship between the two companies started as a trial. Rippling spent nearly a year testing Runlayer's MCP product, but the two sides could not agree on a price and the trial never became a paid deal (TechCrunch). Rippling then built its own MCP server and plans to offer it as a product that competes with Runlayer.

Runlayer's lawsuit says a Rippling employee contacted Berman to warn him that Rippling was building a "copy" of Runlayer's product. A Rippling spokesperson told TechCrunch that the employee has since changed that view (TechCrunch).

Rippling said it told Runlayer about the patents it believed Runlayer had infringed shortly after Runlayer filed its lawsuit. A Rippling spokesperson accused Runlayer of hypocrisy, saying Runlayer is infringing Rippling's inventions while accusing Rippling of violating intellectual property laws (TechCrunch).

Berman called Rippling's lawsuit a "desperate, retaliatory ploy" to distract from Rippling's alleged theft of Runlayer's proprietary technology (TechCrunch).

Runlayer's July 28 complaint, filed in Manhattan federal court, asks for a jury trial, financial damages, attorney's fees, and a court order blocking Rippling from developing or selling a competing product (New York Post).

This dispute is happening while MCP is still new and trying to establish itself as a standard way for AI agents to connect to other software. Because the protocol itself is open and free to use, companies are competing by building their own versions of the tools around it, such as security features and connection managers. That is where the intellectual property fight is now taking place for the first time. Runlayer's product pairs MCP gateway features with threat detection, treating security as part of the connection rather than a separate add-on. Rippling's choice to build its own MCP server rather than pay to license one suggests that, for large companies, this technology is becoming important enough to own rather than buy.

The legal pattern here is familiar. When a larger company has had access to a smaller company's technology during a trial or partnership and then releases a competing product, trade secret theft claims followed by patent counterclaims are a well-known sequence in the courts. What is unusual is that this fight is over a protocol that has been in commercial use for barely a year, and where the open standard itself is not in dispute but the surrounding software built on top of it is. The outcome could become an early example of how courts handle intellectual property claims when products are built on open standards for AI agents, especially when one side says the other did not truly develop its own version but copied from what it saw during the trial.