HR software giant Rippling is hitting back at a lawsuit from NYC AI startup Runlayer, which accused the rival of stealing its trade secrets – alleging in a separate complaint that it was actually Runlayer who mimicked its patented technology.
Runlayer’s platform “infringes Rippling’s patents, steals its intellectual property, and drafts off the substantial time and resources Rippling spent developing this technology over the past decade,” states a complaint filed Monday in US District Court for Delaware.
It accused Runlayer – which is backed by tech billionaire Vinod Khosla – of “free-riding” off of its patented software technologies, “causing actual damages in the form of lost sales, lost customers, and price erosion.”
In separate court filings, Rippling also denied the claims in Runlayer’s lawsuit last month, which alleged Rippling stole the smaller firm’s trade secrets to “build essentially a clone” of its safety and governance product during their commercial partnership.
“It takes a certain boldness to accuse a competitor of violating intellectual property laws while infringing on that competitor’s inventions. But that’s exactly what Runlayer has done here,” a spokesperson for Rippling told The Post.
“Having manufactured claims against Rippling to distract from its business failures, it now has to face a lawsuit for repeatedly copying Rippling’s inventions in building its own products.”
Runlayer responded that Rippling’s lawsuit is simply retaliation and an attempt to distract from the original litigation.
“This is a desperate, retaliatory ploy to distract from the fact Rippling misappropriated our proprietary technology,” Andrew Berman, CEO and co-founder of Runlayer, told The Post.
“We clearly have a standout AI product that has nothing to do with these patents. No attempt to bully or distract will prevent us from protecting our IP and continuing to innovate and create the best product for our fast-growing customer base.”
In Runlayer’s original complaint, it alleged talks with Rippling fell apart when the company refused to pay “a market rate” for its platform – while in the background, it was “secretly building” a copycat using Runlayer’s confidential information.
Runlayer alleged it was tipped off on June 12 when an insider at Rippling texted Berman: “There’s been a project internally to build essentially a clone o[f] Runlayer…It’s not feature complete by any means, but it’s almost a 1 to 1 copy of Runlayer.”
The suit specifically alleged Rippling is preparing to launch a competing a MCP Gateway that provides an extra governance layer that sits between AI models and their servers.
But in a new court filing, Tim Fall, the alleged insider who texted Berman and an engineer at Rippling who has been with the company for one and a half years, said his messages were being misconstrued.
“Now that I have seen and used Rippling’s MCP Gateway, it is clear to me that it is not a ‘clone’ and did not copy the Runlayer MCP Gateway. I would not make those statements knowing what I know now, as they are not correct,” Fall wrote in his declaration.
“I was disappointed to learn that Runlayer disclosed those messages in litigation without my knowledge or permission, and without ever contacting to [sic] me to understand what I meant when I sent them,” he added.
He said he does not recall receiving “any source code, system architecture, or back-end details for the Runlayer MCP Gateway” during the entirety of Rippling’s relationship with Runlayer.
A source familiar with the case told The Post that Rippling “did not invent anything in the MCP industry, so their arguments don’t really work here. The patents simply don’t apply.”
In an opposition filing last Friday, Rippling argued that with “Mr. Fall’s imprecise text message debunked, Runlayer’s case collapses.”
“First, there is no evidence – none – that Runlayer shared trade secrets with Rippling,” Rippling wrote in the filing. “Second, there is no evidence that Rippling used any Runlayer trade secrets.”