Runlayer and Rippling have both dropped the lawsuits they filed against each other, with no settlement, payment or legal fees exchanged. The dispute centred on Rippling's newly launched MCP gateway, a product that directly rivals the one made by Runlayer, an early-stage AI security startup Rippling had tested closely for over a year without ever becoming a paying customer. The episode is being framed as a cautionary tale for founders, showing how, in a fast-moving AI market where building software has become relatively easy, a prospective enterprise customer can quickly turn into a direct competitor.

Runlayer, founded by third-time entrepreneur Andrew Berman and backed by $42 million from investors including Khosla Ventures and Felicis, sued after learning via a text message that Rippling was building a rival product allegedly cloned from its own. Rippling countersued alleging patent infringement, a move Runlayer viewed as a tactic to drain its legal resources; Runlayer withdrew its suit after three weeks of discovery, and Rippling followed suit. Rippling, historically a payroll and benefits company, has now launched both an AI spend-routing gateway competing with Stripe, Ramp and Databricks, and the MCP security gateway competing with Runlayer, Docker and Amazon Bedrock.