Rippling Challenges Runlayer’s Lawsuit, Claims Intellectual Property Theft

Rippling, a prominent HR software company, is countering a lawsuit filed by New York City’s AI startup Runlayer Inc., which accuses Rippling of stealing trade secrets. In a twist, Rippling claims it is Runlayer that infringed on its patented technology.

The lawsuit, submitted on Monday in the U.S. District Court for the District of Delaware, states that Runlayer’s platform “infringes Rippling’s patents, steals its intellectual property, and wastes the resources and time Rippling invested over the past decade in developing this technology.” It specifically accuses Runlayer, financed by tech entrepreneur Vinod Khosla, of “free riding” on its innovations, leading to tangible damages such as lost sales and reduced prices.

Rippling, in a separate court submission, also responded to allegations from last month’s Runlayer lawsuit suggesting it misappropriated small companies’ trade secrets to essentially create replicas of its safety and governance products during partnerships.

A spokesperson for Rippling remarked, “It takes a certain audacity to accuse a competitor of violating intellectual property laws while infringing on a competitor’s invention. But that’s exactly what Runlayer did here.” They further claimed that Runlayer fabricated allegations to divert attention from its own business struggles.

Runlayer’s co-founder, Andrew Berman, countered that Rippling’s lawsuit is merely a retaliatory maneuver aimed at overshadowing the initial claims. He asserted, “This is a desperate retaliatory move to distract from the fact that Rippling has misused our proprietary technology.” He added that their AI products remain unaffected by these patent issues and that they will continue to safeguard their intellectual property.

Runlayer’s initial complaint alleges that negotiations with Rippling fell apart because Rippling refused to pay a fair price for their platform while secretly working on a copycat version using confidential information.

Berman claimed to have learned on June 12 that a Rippling employee sent him a message suggesting Rippling was developing a nearly identical product, though not operational. However, Tim Fall, the Rippling engineer involved, later asserted in a court filing that his message was misinterpreted and that Rippling’s new MCP Gateway is not a clone of Runlayer’s product.

Fall expressed disappointment that his message was used in the lawsuit without his consent, clarifying, “To understand what I meant when I sent the message.” He noted that he doesn’t recall receiving any proprietary details about Runlayer’s MCP Gateway during Rippling’s interactions with them.

A source familiar with the situation mentioned that Rippling’s claims lack merit, stating, “Rippling didn’t invent anything in the MCP industry, so their claims just don’t hold up here. The patent simply doesn’t apply.”

In its latest rebuttal, Rippling maintained that Runlayer’s case is faltering due to the misinterpretation of Fall’s messages, insisting there’s no evidence that Runlayer shared any trade secrets with Rippling or that Rippling utilized any of Runlayer’s proprietary information.