Artificial intelligence startup Runlayer has filed a federal lawsuit against HR technology company Rippling, alleging the company misappropriated confidential trade secrets to develop a competing AI product. This lawsuit adds to a growing number of legal disputes surrounding artificial intelligence, intellectual property and enterprise software as companies strive to expand their AI capabilities.
The complaint was filed in the U.S. District Court for the Southern District of New York. He claims that Rippling improperly used proprietary information obtained during its business relationship with Runlayer. The startup says its confidential technology became the basis for a competing internal product after negotiations between the companies broke down.
Enterprise AI adoption continues to accelerate across all industries. As a result, legal experts expect more litigation over confidential business information, licensing agreements and trade secret protections. Therefore, the outcome of this case could influence how tech companies structure future AI partnerships.
Key takeaways
- Runlayer sued Rippling in federal court for alleged theft of AI trade secrets.
- The startup claims that Rippling used confidential information to create a competing AI platform.
- Rippling denies the allegations and says it developed its technology independently.
- Runlayer seeks an injunction preventing use of the challenged technology and damages.
- The lawsuit highlights the growing legal risks associated with corporate AI partnerships and intellectual property.
Runlayer Alleges Theft of AI Trade Secrets
According to the lawsuit, Runlayer has licensed its AI security platform to Rippling. The business partnership lasted almost a year. The software has helped organizations evaluate, monitor and manage artificial intelligence systems.
Runlayer says the relationship initially focused on integrating its technology into Rippling’s operations. However, the companies reportedly failed to reach a broader trade deal. As a result, Runlayer terminated the business relationship in June 2026.
Shortly after, the startup says it discovered that Rippling had begun developing an internal AI product that closely resembled its proprietary platform.
The complaint also alleges that an internal alerted Runlayer to a project designed to create what it describes as a “clone” of its technology. According to Runlayer, competing software reflected key features and capabilities developed over years of research and engineering.
If proven, the allegations could support allegations regarding misappropriation of trade secrets, violation of confidentiality obligations and unfair competition.
Runlayer seeks injunction and damages
Runlayer argues that Rippling improperly profited from confidential information shared during their business relationship.
As part of the lawsuit, the company is asking the court to:
- Prohibit Rippling from using the purported trade secrets.
- Prevent the distribution or marketing of products built with the disputed technology.
- Award damages for alleged misuse of proprietary information.
- Grant any additional relief the court deems appropriate.
Runlayer CEO Andrew Berman said the company has invested significant resources in developing its AI technology and intends to protect its intellectual property through legal action.
Rippling rejects allegations
Rippling strongly disputes these claims.
A company spokesperson said the lawsuit lacked merit and argued that Rippling developed its AI platform independently using its own engineering resources. The company also said it was confident it would successfully defend itself in the litigation.
As the trial is in its early stages, the court has not evaluated the evidence or ruled on the merits of either party’s allegations.
As in most civil litigation involving trade secrets, discovery is expected to play an important role as both parties seek documents, technical records and testimony.
Rippling faces another lawsuit
The new lawsuit comes as Rippling remains embroiled in another widely publicized legal battle involving HR software competitor Deel.
In that separate dispute, Rippling accused Deel of orchestrating industrial espionage through a former employee to obtain confidential business information. Deel has denied the allegations and asserted counterclaims involving racketeering and unfair competition.
Although the lawsuits involve different parties and unrelated facts, the two cases demonstrate how aggressively tech companies protect proprietary information in an increasingly competitive AI market.
Why the Runlayer Trial Matters
The dispute extends beyond two technology companies. Instead, it reflects the broader legal challenges faced by organizations that license AI software, share confidential technical information, or collaborate on artificial intelligence projects.
Trade secret disputes are on the rise
Unlike patents, trade secrets only receive legal protection when companies actively maintain their confidentiality.
As a result, companies often rely on strict nondisclosure agreements, limited access controls, and detailed licensing agreements when sharing proprietary software with customers or business partners.
As AI development becomes more competitive, trade secret litigation is expected to increase in the technology sector.
AI partnerships require stronger contracts
Enterprise AI vendors frequently offer their customers access to proprietary software during pilot programs and product evaluations.
That’s why lawyers are placing more emphasis on confidentiality provisions, proprietary rights, audit clauses, and restrictions preventing clients from developing competing products based on licensed technology.
Well-drafted agreements can significantly reduce legal risk if business relations subsequently deteriorate.
Corporate legal teams face new AI risks
General counsel and intellectual property attorneys are increasingly advising companies on AI governance, software licensing, cybersecurity, and confidential information management.
As a result, organizations are reviewing internal policies governing access to source code, technical documentation, algorithms, and product roadmaps before entering into AI partnerships.
The Runlayer trial illustrates why these precautions have become essential.
What happens next?
The case will now move through the federal court process unless the parties reach a quick settlement.
During the preliminary investigation, the two companies may exchange documents, technical evidence, internal communications and expert analyzes regarding the disputed technology. These documents could become essential in determining whether confidential information has been used inappropriately.
At the same time, the lawsuit could attract attention from technology companies, investors, software developers and intellectual property lawyers. The end result could shape future AI licensing deals and influence how companies protect their proprietary innovations while collaborating with commercial partners.
Frequently Asked Questions
Why is Runlayer chasing Rippling?
Runlayer alleges that Rippling improperly used confidential information obtained during their business relationship to develop a competing AI platform.
What are trade secrets?
Trade secrets include confidential business information such as software code, algorithms, technical processes, product designs, customer information and proprietary business methods that provide a competitive advantage.
What is Runlayer looking for in the lawsuit?
The company is seeking an injunction preventing Rippling from using the purported trade secrets, restrictions on competing products built from the information, and damages.
Has Rippling admitted his wrongdoing?
No. Rippling denies all allegations and says it developed its AI technology independently.
Why is this trial important?
The dispute highlights growing legal challenges related to artificial intelligence, intellectual property, software licensing and corporate partnerships in AI. The outcome could influence how future AI collaborations are structured and protected.
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