Runlayer, a small tech startup, filed a lawsuit against HR software company Rippling on July 28, 2026. Runlayer says Rippling stole its trade secrets, competed unfairly, and broke a contract. The complaint, reviewed by TechCrunch, accuses Rippling of using nearly a year of close teamwork under a product trial agreement to copy Runlayer's core product instead of licensing it (TechCrunch).

Here is what Runlayer builds. AI programs, like the chatbots and assistants people use today, are smarter when they can reach outside information and tools. MCP, or Model Context Protocol, is a free standard that Anthropic, the AI company, released in November 2024 to give AI programs a consistent way to pull in that outside data. Think of MCP like a universal plug that lets any AI connect to any data source. Runlayer makes a gateway, a secure middleman that manages those connections. The company, led by CEO Andrew Berman, has raised $42 million from investors including Khosla Ventures and Felicis.

According to the complaint, Runlayer and Rippling signed a mutual non-disclosure agreement, or NDA, which is a legal promise to keep each other's secrets. They also signed a product trial agreement that explicitly barred Rippling from copying Runlayer's intellectual property or building something based on it. The evaluation reportedly spanned close to a year and involved deep engineering collaboration between the two companies' technical teams. When the parties could not agree on pricing, Runlayer terminated the trial.

Runlayer alleges that a Rippling insider subsequently texted Berman to warn him about an internal Rippling project to build a clone of Runlayer's gateway. The lawsuit hinges on whether Rippling's own MCP product draws on proprietary information obtained during the trial period or was developed independently.

Rippling has confirmed to TechCrunch that it is launching its own MCP gateway. A Rippling spokesperson denied the IP misuse allegations, stating the company is building the product using only its proprietary information.

Runlayer has retained Sullivan & Cromwell for the litigation, signaling a serious legal commitment to the dispute.

The key distinction in this case is between the open protocol and Runlayer's specific product. Anthropic made MCP freely available to everyone. But a protocol specification, the set of rules, is different from a finished, production-grade product built on those rules. Runlayer's claim is not that Rippling used the open protocol. It is that Rippling used proprietary implementation details, architectural decisions, and integration patterns that Runlayer shared privately under NDA during the trial.

The broader context here is a familiar risk pattern for small startups. A larger company requests a deep technical evaluation, engineering teams collaborate for months, deal terms fall through, and the larger company ships a similar product. Whether that sequence constitutes independent development, legitimate competition, or theft is precisely what the court will need to sort out. The NDA and trial agreement terms, the substance of what was shared during the collaboration, and the timeline of Rippling's internal development will be the contested facts.

Rippling's denial is straightforward: the product uses only its own proprietary information. If the case proceeds to discovery, the legal phase where each side must turn over internal records, the burden will shift to demonstrating what specific information crossed the NDA boundary, how it was used, and whether the resulting product bears traces that cannot be explained by independent engineering on a public protocol.

The MCP gateway market is early enough that the outcome could shape how larger companies approach smaller startups for evaluation partnerships. Startups in this space are simultaneously pitching potential customers and potential competitors, often the same entity. The Runlayer dispute may accelerate the adoption of more restrictive evaluation terms, staged disclosure models, or technical measures like limiting how much a trial partner can access, to make it harder to reverse-engineer the product.

The case also puts a spotlight on how young the MCP ecosystem is. Anthropic released the protocol less than two years ago. Companies are now raising tens of millions of dollars to build commercial infrastructure around it, and established companies with adjacent products are moving to offer their own gateways. Friction between infrastructure startups and platform companies was predictable. What remains unresolved is whether the legal frameworks startups rely on, NDAs and trial agreements, are sufficient when the product being evaluated is a thin layer on top of a public protocol and the evaluating partner has the engineering capacity to rebuild it.

Runlayer's decision to litigate, backed by Sullivan & Cromwell, indicates the company views the disclosure during the trial period as substantive enough to support a trade secret claim. Rippling's counter-position is that an MCP gateway can be built independently on the open protocol without reference to a partner's implementation. The court will eventually weigh the specifics. For the broader AI infrastructure community, the dispute is an early stress test of how trust, collaboration, and IP protection function in a market segment that did not exist 24 months ago.