AI Startup Sues Rippling Over Alleged Trade Secret Theft
An AI company based in New York is taking legal action against Rippling, a prominent software firm in Silicon Valley. The startup, Runlayer, alleges that Rippling has stolen its trade secrets to essentially create imitations of its safety and governance products.
Runlayer, which focuses on AI security and has received support from tech investor Vinod Khosla, claims that Rippling breached a non-disclosure agreement during a partnership that lasted nearly a year. This lawsuit was filed in the Southern District of New York.
After discussions to renew their partnership fell through this summer—largely because Rippling was unwilling to pay a “market price” for Runlayer’s services—the complaint suggests that Rippling began secretly developing competing AI products using Runlayer’s confidential details.
According to the lawsuit, Runlayer was alerted on June 12 by a source within Rippling, who provided a message to CEO Andrew Berman, stating that the company had “essentially built a clone.” The insider noted that while Rippling’s version was not fully operational, it was very much akin to Runlayer’s offerings.
Further claims from insiders indicated that Rippling’s CEO, Parker Conrad, might have influenced the creation of these cloned products, with remarks suggesting that they “smell like Parker.”
Runlayer is pursuing not just damages and legal fees but also a jury trial and a preliminary injunction to prevent Rippling from further developing or marketing these products built on its trade secrets.
Rippling has yet to respond to requests for comments on the matter.
Runlayer, officially known as Anysource, Inc., which aims to assist firms in adopting AI, has managed to secure $42 million in funding from backers like Khosla Ventures and the California-based Felicis in less than a year since its inception.
Despite having substantial backing, Runlayer, which only employed five people at the time, eagerly formed a partnership with Rippling—a company reportedly valued at around $16 billion.
Though headquartered in San Francisco, Rippling operates offices in New York and was granted a $3.4 million tax credit from Governor Hochul in December 2025, hiring 371 new employees to enhance its New York City operations.
The lawsuit indicates that during the partnership, Runlayer shared critical trade secrets, including its source code and a specialized “Gateway Deployment Architecture,” safeguarded by strict confidentiality agreements that prevented Rippling from copying or creating derivative works based on the information provided.
After suspending their services to Rippling on June 12, Runlayer alleges that it became aware of Rippling’s attempts to create a competing AI governance platform that day.
The legal document asserts that Rippling is gearing up to launch its own version of an MCP gateway, which was confirmed through unsolicited screenshots received by Runlayer from a third party on July 1.
This gateway functions as a bridge between an AI model and its MCP server, allowing AI agents to utilize various tools and data while ensuring a secure governance framework.
Additionally, the complaint claims that since Runlayer halted access to its Pilot product, it has noted numerous job listings from Rippling that appear to align closely with the confidential information shared by Runlayer over the past year.
