Runlayer and Rippling have mutually dismissed their lawsuits without any settlements or exchange of money. The dispute centered on Rippling’s development of an AI gateway product that directly competed with Runlayer’s technology after an extended period of collaboration between their engineering teams. Despite the lawsuit’s end, Rippling immediately launched its competing AI Access Management Product (MCP gateway), a move underscoring the rapid shifts and competitive urgency in the AI software space.

Runlayer, founded by Andrew Berman and funded with $42 million from investors such as Khosla Ventures and Felicis, had developed the secure MCP gateway to manage enterprise AI agent data requests and access controls. Rippling had tested this product but decided not to become a customer, instead building a similar gateway internally. Runlayer’s subsequent suit alleged Rippling violated agreements related to product testing, while Rippling’s countersuit accused Runlayer of patent infringements, escalating legal tensions before both sides withdrew their claims after weeks of discovery.

The case highlights a growing challenge for startups in the AI sector, where collaboration can quickly shift to competition due to fast-evolving market dynamics. Rippling, traditionally focused on payroll and benefits management, has significantly expanded into AI infrastructure by offering solutions that oversee AI token spend and employee access controls—directly competing with startups like Runlayer, Docker, and Amazon Bedrock. This expansion reflects the broader trend of companies rapidly entering new AI-related markets to capture emerging business opportunities.

For founders, the episode serves as a cautionary tale illustrating how quickly partnerships can dissolve when product ideas overlap and market pressures intensify. The AI landscape’s momentum means that enterprises’ needs and strategic priorities can change drastically in just a few months, making the management of technical alliances and intellectual property more critical than ever. Both Runlayer and Rippling now focus on their AI security and gateway offerings amid an ecosystem crowded with competitors striving to control critical components of AI deployment in businesses.