Runlayer and Rippling Drop Lawsuits: A Lasting Cautionary Lesson for Founders
On Wednesday evening, Runlayer and Rippling mutually decided to drop their lawsuits against each other. There was no settlement reached, no financial transactions occurred, and even lawyers’ fees were not exchanged, as reported in court documents reviewed by TechCrunch.
In a celebratory move, Rippling promptly unveiled its MCP gateway, the key product involved in the legal disputes and a direct competitor to Runlayer’s solution.
This public dispute serves as a lesson for founders: In today’s AI era, where developing new software is almost effortless, your next rival could be an unexpected one, perhaps even a potential customer.
To summarize this brief legal conflict: Runlayer is an early-stage startup that emerged from stealth in November 2025, having secured a total of $42 million from venture capitalists, including Khosla Ventures’ Keith Rabois and Felicis. The company is led by Andrew Berman, a third-time founder whose previous ventures include the baby monitor company Nanit and an AI video conferencing tool, Vowel, which was sold to Zapier in 2024.
After over a year of testing Runlayer’s MCP gateway, during which both engineering teams collaborated closely, Rippling opted not to become a customer, as noted in Runlayer’s lawsuit. Instead, Berman received a message from a Rippling employee indicating that the company was developing its own MCP gateway, intending to launch it as a distinct product. This employee characterized Rippling’s offering as a duplicate of Runlayer’s.
In response, Runlayer filed a lawsuit, asserting that Rippling breached contractual agreements related to the testing of its products.
An MCP gateway is responsible for securely managing an enterprise’s AI agent requests for data from various software systems. For example, when a hiring manager requests information about the top five candidates for an open position, including their email addresses, that data must be fetched from the company’s recruitment platform. The gateway manages this retrieval, rather than providing agents with direct access to the company’s software systems. It can also incorporate additional features such as role-based access control (with managers having different access than interns), logging, and usage tracking.
Rippling retaliated with a countersuit, claiming that Runlayer infringed on some of its patents. This countersuit was perceived by Runlayer as a tactic to pressure it into withdrawing its lawsuit while increasing legal costs.
Ultimately, Runlayer withdrew its lawsuit after three weeks of discovery, and Rippling also abandoned its suit without securing any settlement.
Thus, while the lawsuits yielded nothing but a series of public disputes, there is a significant insight for founders. The rapidly evolving AI landscape necessitates a reevaluation of the protracted technical assessments that enterprises often impose on startups, as the requirements and expectations of enterprises may drastically change over the months between the initiation of such evaluations.
Meanwhile, in just a few weeks, Rippling, traditionally focused on payroll and benefits management, has entered the AI gateway sector with a tool that can route to various models while monitoring token expenditures by employees. This offering is now pitted against competitors like Stripe, Ramp, and Databricks.
Furthermore, Rippling is now also venturing into AI security with its MCP gateway, which associates AI access with employee roles, competing with entities such as Runlayer, Docker, and Amazon Bedrock.
Runlayer, on the other hand, promotes a broader suite of agent security services integrated with the gateway, ranging from agent creation to identifying shadow AI agents operating within enterprises without IT’s knowledge.
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