MCP Startup Sues Rippling Over Alleged IP Theft in AI Infrastructure Dispute

Runlayer, a startup specializing in Model Context Protocol (MCP) gateways, has filed a lawsuit against Rippling, an HR software company, alleging that Rippling stole its intellectual property. The dispute centers on a product trial where Rippling, as a prospective customer, accessed Runlayer’s product roadmap, source code, and engaged in nearly a year of engineering collaboration. Despite a mutual non-disclosure agreement and trial terms prohibiting IP copying, Runlayer claims Rippling internally developed a near-identical clone of its MCP gateway. Rippling denies the allegations, stating it is launching a proprietary MCP solution and that Runlayer’s claims are a result of business failures. The case highlights challenges in selling complex AI infrastructure to enterprises, where competitors may replicate innovations. Runlayer has retained high-profile law firm Sullivan & Cromwell, adding credibility to the lawsuit. The incident underscores broader industry tensions as MCP gateways become critical for AI interoperability, with Anthropic’s open-source MCP protocol and growing competition from startups like Runlayer. Both parties face difficulties: enterprises may opt for in-house solutions, while startups risk legal battles over IP in a rapidly evolving market.