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. The lawsuit adds to the growing number of legal disputes surrounding artificial intelligence, intellectual property, and enterprise software as businesses race to expand their AI capabilities.
The complaint was filed in the U.S. District Court for the Southern District of New York. It claims Rippling improperly used proprietary information obtained during its commercial relationship with Runlayer. The startup argues that its confidential technology became the foundation for a competing internal product after negotiations between the companies broke down.
Enterprise AI adoption continues to accelerate across industries. Consequently, legal experts expect more disputes involving confidential business information, licensing agreements, and trade secret protections. Consequently, the outcome of this case could influence how technology companies structure future AI partnerships.
Key Takeaways
- Runlayer has sued Rippling in federal court over alleged AI trade secret theft.
- The startup claims Rippling used confidential information to build a competing AI platform.
- Rippling denies the allegations and says it independently developed its technology.
- Runlayer seeks an injunction preventing use of the disputed technology and monetary damages.
- The lawsuit highlights increasing legal risks surrounding enterprise AI partnerships and intellectual property.
Runlayer Alleges AI Trade Secret Theft
According to the lawsuit,
Runlayer licensed its AI security platform to Rippling. The commercial partnership lasted nearly one year. The software helped organizations evaluate, monitor, and manage artificial intelligence systems.
Runlayer claims the relationship initially focused on integrating its technology into Rippling’s operations. However, the companies reportedly failed to reach a broader commercial agreement. As a result, Runlayer terminated the business relationship in June 2026.
Shortly afterward, the startup alleges it discovered that Rippling had begun developing an internal AI product that closely resembled its proprietary platform.
The complaint also alleges an insider alerted Runlayer to a project designed to create what it describes as a “clone” of its technology. According to Runlayer, the competing software mirrored key features and capabilities developed through years of research and engineering.
If proven, the allegations could support claims involving trade secret misappropriation, breach of confidentiality obligations, and unfair competition.
Runlayer Seeks Injunction and Damages
Runlayer argues that Rippling improperly benefited from confidential information shared during their commercial relationship.
As part of the lawsuit, the company is asking the court to:
- Prohibit Rippling from using the alleged trade secrets.
- Prevent the distribution or commercialization of products built with the disputed technology.
- Award monetary damages for the alleged misuse of proprietary information.
- Provide any additional relief the court considers appropriate.
Runlayer CEO Andrew Berman said the company has invested significant resources into developing its AI technology and intends to protect its intellectual property through legal action.
Rippling Rejects the Allegations
Rippling strongly disputes the claims.
A company spokesperson said the lawsuit lacks merit and maintained that Rippling independently developed its AI platform using its own engineering resources. The company also expressed confidence that it would successfully defend itself during the litigation.
Because the lawsuit remains in its early stages, the court has not evaluated the evidence or ruled on the merits of either party’s claims.
Like most civil litigation involving trade secrets, discovery is expected to play a significant role as both sides seek documents, technical records, and witness testimony.
Rippling Faces Another Lawsuit
The new lawsuit comes as Rippling remains involved in another widely publicized legal battle involving HR software competitor Deel.
In that separate dispute, Rippling has accused Deel of orchestrating corporate espionage through a former employee to obtain confidential business information. Deel has denied those allegations and has asserted counterclaims involving racketeering and unfair competition.
Although the lawsuits involve different parties and unrelated facts, both cases demonstrate how aggressively technology companies are protecting proprietary information in an increasingly competitive AI market.
Why the Runlayer Lawsuit Matters
The dispute extends beyond two technology companies. Instead, it reflects broader legal challenges facing organizations that license AI software, share confidential technical information, or collaborate on artificial intelligence projects.
Trade Secret Litigation Is Increasing
Unlike patents, trade secrets receive legal protection only when companies actively maintain their confidentiality.
Consequently, businesses often rely on strict non-disclosure agreements, limited access controls, and detailed licensing contracts when sharing proprietary software with customers or business partners.
As AI development becomes more competitive, trade secret litigation is expected to increase across the technology sector.
AI Partnerships Require Stronger Contracts
Enterprise AI vendors frequently provide customers with access to proprietary software during pilot programs and product evaluations.
Therefore, lawyers are placing greater emphasis on confidentiality provisions, ownership rights, audit clauses, and restrictions preventing customers from developing competing products based on licensed technology.
Well-drafted agreements can significantly reduce legal risk if commercial relationships later deteriorate.
Corporate Legal Teams Face New AI Risks
General counsel and intellectual property attorneys increasingly advise 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 AI partnerships.
The Runlayer lawsuit illustrates why those precautions have become essential.
What Happens Next?
The case will now move through the federal litigation process unless the parties reach an early settlement.
During discovery, both companies may exchange documents, technical evidence, internal communications, and expert analyses regarding the disputed technology. Those materials could become central to determining whether confidential information was improperly used.
Meanwhile, the lawsuit may attract close attention from technology companies, investors, software developers, and intellectual property lawyers. The eventual outcome could shape future AI licensing agreements and influence how businesses protect proprietary innovations while collaborating with commercial partners.
Frequently Asked Questions
Why is Runlayer suing Rippling?
Runlayer alleges Rippling improperly used confidential information obtained during their commercial 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 seeking in the lawsuit?
The company seeks an injunction preventing Rippling from using the alleged trade secrets, restrictions on competing products built from that information, and monetary damages.
Has Rippling admitted wrongdoing?
No. Rippling denies all allegations and maintains that it independently developed its AI technology.
Why is this lawsuit important?
The dispute highlights growing legal challenges surrounding artificial intelligence, intellectual property, software licensing, and enterprise AI partnerships. The outcome could influence how future AI collaborations are structured and protected.
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Runlayer Files AI Trade Secrets Lawsuit Against Rippling first appeared on
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