Rippling counter-sues Runlayer over patent claims in escalating AI dispute

HR technology company Rippling has filed a counter-lawsuit against startup Runlayer, alleging patent infringement. The legal action follows a suit filed by Runlayer last month, which accused Rippling of breach of contract and misappropriating product ideas. The dispute arose after Rippling trialled Runlayer’s MCP gateway product for nearly a year without reaching a purchase agreement, subsequently developing its own competing server. Runlayer’s founder, Andrew Berman, described Rippling’s lawsuit as a retaliatory ploy, while Rippling accused Runlayer of hypocrisy and copying its inventions.

The counter-lawsuit specifically accuses Runlayer of infringing on three of Rippling’s patents. This legal escalation comes shortly after Rippling informed Runlayer of the patents it believed were infringed, a move that occurred soon after the startup filed its initial lawsuit. Rippling has a history of turning internally used technology into commercial products, such as its recently released AI Spend Console, and is expected to soon offer its own MCP server as a product that competes with Runlayer.

Runlayer launched its product approximately one year ago, bundling an MCP gateway with cybersecurity features, including threat detection. MCP is an open standard that allows AI agents to connect with data and software systems needed to work independently. The startup has raised a total of $42 million and was founded by Andrew Berman, a third-time founder whose previous companies include baby-monitor maker Nanit and AI video conferencing tool Vowel, which was sold to Zapier in 2024.

The relationship between the two companies has been marked by dramatic claims. Runlayer’s lawsuit includes the allegation that a Rippling employee previously warned Berman that his employer was building a “copy” of Runlayer’s product. A Rippling spokesperson stated that the employee has since revised that view. Rippling’s spokesperson told TechCrunch that the company’s lawsuit calls out Runlayer’s hypocrisy, asserting that the startup has manufactured claims to distract from its business failures while infringing on Rippling’s inventions.

Berman responded in a written statement, describing the counter-suit as a desperate, retaliatory ploy intended to distract from Rippling’s alleged misappropriation of proprietary technology. He maintained that Runlayer has a standout AI product unrelated to the patents in question and vowed to continue protecting its intellectual property. The outcome of the legal proceedings remains unknown, as it is up to the courts to determine who did what to whom, unless the parties settle.

This legal battle serves as a warning regarding the risks for both buyers and sellers in an era where enterprises increasingly build technology in-house after trialling startup solutions. With AI advances, enterprises have never before been more empowered to build tech in-house, yet they still may put a startup through its paces before choosing that option. The dispute underscores the evolving dynamic between established enterprise software firms and AI startups, particularly regarding the Model Context Protocol.