Selling AI infrastructure to other tech companies always carried a quiet risk: what if the customer just builds it themselves? Runlayer, an MCP gateway startup backed by $42 million, claims that’s exactly what HR software giant Rippling did after a nearly year-long trial that involved sharing source code and product roadmaps.
The suit, filed by the white-shoe law firm Sullivan & Cromwell, alleges that Rippling’s forthcoming MCP gateway is “almost a 1 to 1 copy” of Runlayer’s product. According to the complaint, the companies couldn’t agree on a price after “nearly a year of intensive engineering collaboration,” so Runlayer ended the trial. A Rippling insider then allegedly texted Runlayer’s CEO to blow the whistle on an internal cloning project.
Rippling doesn’t deny it’s launching an MCP gateway. A spokesperson called the lawsuit a “panicked effort to avoid competition” and insisted the product is built using “only our proprietary information.” So this is heading for a messy IP fight, and the outcome will hinge on whether Runlayer can prove Rippling’s gateway is a derivative work, not a clean-room build.
The real story here isn’t just courtroom drama. It’s a cautionary look at the brutal mechanics of enterprise AI sales. MCP gateways — which add management and security layers on top of Anthropic’s open-source Model Context Protocol — are a suddenly crowded market. Runlayer raised its millions from Khosla Ventures and Felicis, but that doesn’t change a hard truth: even a deep, candid trial can end with a prospect turning into a competitor. The lawsuit is a warning flare for any startup that has to bare its technical soul to win a deal.
