On Wednesday night, Lanlayer and Rippling withdrew their respective lawsuits. No settlement was reached. There was no money exchanged. According to court documents seen by TechCrunch, there will be no legal fees.
Ripling celebrated this by immediately releasing MCP Gateway, a product that is central to dueling litigation and competes with Runlayer’s product.
This public fight is a wake-up call for founders. In the age of AI, building new software has become almost trivial, and you never know who your next competitor will be. It could also be a potential customer.
To summarize the short-lived legal turmoil, Runlayer is an early-stage startup that launched from stealth in November 2025 and raised a total of $42 million from VCs including Keith Rabois of Khosla Ventures and Felicis. The company is led by third-time founder Andrew Berman (previous companies include baby monitor maker Nanit and AI video conferencing tool Vowel, which was sold to Zapier in 2024).
According to Runlayer’s complaint, Ripling never signed on to become a customer after two engineering teams worked closely to test Runlayer’s MCP gateway for more than a year. Instead, Berman received a text from a Rippling employee saying his employer was building its own MCP gateway and planned to release it as a product. The employee described Ripling’s product as a clone of Runlayer’s product.
Runlayer filed a lawsuit alleging that Rippling breached a contractual agreement regarding testing of its products.
MCP Gateway securely processes data requests from other software systems by enterprise AI agents. So, for example, if a recruiter wants to ask for details about the top five candidates (including email), that data should come from the company’s recruiting system. The gateway handles the retrieval process rather than giving agents direct access to your company’s software systems. Additionally, you can layer in other features such as role-based access control for employees (managers get different access than interns), observability (logs and usage trails), and more.
Rippling subsequently countersued, alleging that Runlayer infringed some of its patents. Lanlayer saw the move as a way to induce them to drop the case while increasing legal costs.
Lanlayer dropped the lawsuit after the past three weeks of discovery efforts. Rippling withdrew its lawsuit and did not collect any settlement money.
So while this case didn’t just lead to a lot of public fire, there are deeper lessons for founders. The AI landscape is changing rapidly, and the long-term technological firefights that companies prefer to impose on startups need to be reconsidered. A company’s needs and desires can change dramatically in the months after an AI startup enters the scene.
Meanwhile, within weeks, Rippling, which has traditionally focused on payroll and benefits management, entered the AI gateway market with tools that can dashboard token spending per employee and route it to various models. This product competes with Stripe, Ramp, Databricks, and others.
Now, Rippling is also working on its AI security business with this MCP gateway that connects AI access to employee roles. It competes with Runlayer, Docker, Amazon Bedrock, etc.
When it comes to Runway, its pitch is a broad bundle of agent security services associated with the gateway, from agent creation to detecting shadow AI agents running inside the enterprise unbeknownst to IT.
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