A growing legal battle between HR technology company Rippling and AI security startup Runlayer has escalated into a patent dispute, with Rippling accusing the young company of infringing three of its patents related to data and software technology.
Rippling filed the lawsuit on August 10 in the U.S. District Court for the District of Delaware, marking the latest development in an increasingly complicated dispute between the two companies. The lawsuit comes only weeks after Runlayer filed its own case against Rippling, accusing the larger company of misappropriating trade secrets and using its technology to develop a competing product.
The back-and-forth lawsuits have transformed what began as a potential business relationship into a major intellectual-property confrontation.
From Potential Partnership to Legal Battle
The dispute reportedly began after Rippling evaluated Runlayer’s technology.
Runlayer, a New York-based AI security startup, develops technology designed to help companies control and monitor how AI agents interact with enterprise software and data. Its platform is built around an emerging technology called the Model Context Protocol, or MCP, which enables AI applications and agents to connect with external tools, systems and information.
Rippling began testing Runlayer’s platform as it explored ways to manage its growing use of AI across its business.
The companies reportedly spent nearly a year working together during the evaluation period. However, the relationship eventually broke down after the two sides were unable to agree on commercial terms. Runlayer subsequently accused Rippling of using knowledge gained during the relationship to build a competing MCP gateway. Rippling has strongly denied those allegations. Now, Rippling has responded with its own lawsuit, alleging that Runlayer is actually the company infringing intellectual property.
Rippling’s Patent Claims
In its Delaware lawsuit, Rippling alleges that Runlayer’s products infringe three of its patents.
The company claims that Runlayer’s technology makes unauthorized use of inventions covered by Rippling’s patents and has benefited commercially from technology Rippling says it developed over many years.
Rippling is seeking monetary damages and an order preventing Runlayer from continuing to infringe the patents.
The lawsuit represents a significant escalation because patent litigation can potentially result in substantial financial penalties as well as restrictions on how a company develops or sells its products.
For Runlayer, which is considerably smaller than Rippling, the dispute could therefore become a major business challenge.
Runlayer has raised tens of millions of dollars from investors, including Khosla Ventures and Felicis, to develop its AI security technology. The company is still operating in a rapidly developing market where startups are competing to establish themselves as essential infrastructure providers for enterprise AI.
Runlayer Had Accused Rippling First
Runlayer’s original lawsuit, filed in July, painted a very different picture. The startup alleged that Rippling had gained access to its proprietary technology during the product evaluation and later used that information to develop a competing product. According to Runlayer, a Rippling employee allegedly warned the startup’s founder that the company was developing something resembling a copy of Runlayer’s platform.
Runlayer argued that Rippling’s actions amounted to trade-secret misappropriation, breach of contract and unfair competition. The startup asked the court to prevent Rippling from using its alleged trade secrets and from launching or selling the competing product. Rippling rejected those accusations, describing them as an attempt to avoid competition and claiming that its own product was developed using proprietary technology. The company has maintained that it did not use Runlayer’s confidential information.
The legal fight is significant because of what both companies are building.
MCP gateways sit between AI agents and the systems they need to access. As businesses increasingly deploy AI agents capable of taking actions on behalf of employees, companies need mechanisms to control what those agents can access and what they are allowed to do. That has created a new market for AI security, governance and access-management tools. Runlayer positioned itself in this emerging market by providing technology designed to monitor and control AI-agent interactions with enterprise systems.
Rippling is also increasingly expanding beyond traditional human-resources software. The company has been developing products designed to help businesses manage their use of AI and connect AI tools with corporate data. That means the two companies are not merely fighting over patents and trade secrets. They are also competing for a position in what could become a significant new enterprise technology market.
The Importance of Intellectual Property
The dispute highlights a broader challenge facing the rapidly expanding AI industry. As startups develop new infrastructure around AI agents, questions over who owns particular technological ideas are becoming increasingly important. Companies often collaborate with potential customers through pilot programs, technical evaluations and partnerships. During these relationships, customers can gain extensive knowledge about a startup’s products and architecture. That creates difficult boundaries between legitimate product development and alleged misuse of confidential information.
The Runlayer-Rippling dispute illustrates how quickly such relationships can become contentious when a potential customer decides to build a competing product internally. At the same time, Rippling’s patent lawsuit shows that startups themselves can face allegations that their products infringe intellectual property owned by larger technology companies.
What Happens Next
The two lawsuits are likely to produce a complicated legal battle over patents, trade secrets, contracts and the technology underlying AI-agent infrastructure.
A major question will be whether Runlayer’s technology actually falls within the scope of Rippling’s patents. The court will also have to consider Runlayer’s allegations concerning Rippling’s alleged use of confidential information.
Both sides have strong incentives to defend their intellectual property claims.
For Rippling, successfully enforcing its patents could strengthen its position as it expands into AI-related enterprise software. For Runlayer, defending against the allegations will be critical to protecting its technology, reputation and ability to compete in the growing AI security market.
The dispute also demonstrates how valuable AI infrastructure technology has become. As companies race to deploy AI agents capable of interacting with sensitive business systems, the software controlling those interactions is becoming increasingly strategic.
What started as a potential partnership has now become a battle over who owns the technology powering that future.
With both companies accusing the other of crossing intellectual-property boundaries, the courts will ultimately have to determine whether Runlayer infringed Rippling’s patents, whether Rippling misused Runlayer’s trade secrets, or whether the two companies’ technologies developed independently in an increasingly crowded AI market.
Either way, the outcome could have implications well beyond these two companies, particularly as businesses increasingly rely on AI agents to access corporate data and perform increasingly complex tasks.
