Your Prospective Customer Could Become Your Competitor: What the Runlayer-Rippling Fight Teaches Startups
A prospective enterprise customer wants to test your product.
That is usually good news.
But what happens when the trial lasts for months, your engineering teams work closely together, you share technical information, and the prospective customer ultimately decides not to buy?
For AI startup Runlayer and HR technology company Rippling, that relationship ended in dueling lawsuits and a competing product.
The lawsuits have since been dropped, but the dispute offers founders a useful lesson about what they share before a customer relationship is finalized.
What Founders Need to Know
Enterprise trials can require startups to reveal considerably more than what appears in a public product demo.
A prospective customer may want to understand architecture, integrations, security, upcoming features, technical limitations, or other details before committing.
An NDA, or nondisclosure agreement, can establish obligations concerning certain confidential information exchanged during those discussions.
Some information may potentially qualify as a trade secret when it derives economic value from not being generally known and reasonable measures are taken to protect its secrecy.
An evaluation or trial agreement can go further by establishing the rules governing how a prospective customer may access and evaluate the product.
Those protections can become particularly important when the prospective customer has the technical resources to build competing functionality itself.
What This Looks Like in Practice: Runlayer v. Rippling
Runlayer develops technology around Model Context Protocol, or MCP, which allows AI systems to connect with outside data and software tools.
Rippling became an early prospective customer.
According to Runlayer’s allegations reported by TechCrunch, Rippling tested Runlayer’s product for nearly a year, and the companies’ engineering teams worked closely together. Runlayer alleged that it shared information including its product roadmap and source code.
The parties had a mutual NDA, and Rippling had signed a product trial agreement containing restrictions related to copying Runlayer’s intellectual property or creating derivative works.
But the trial never became a paid contract.
Instead, Rippling developed its own MCP gateway.
Runlayer sued, alleging breach of contract and misappropriation of its technology and trade secrets. Rippling denied those allegations and subsequently filed its own lawsuit accusing Runlayer of infringing three Rippling patents.
Then, in August, both companies dropped their lawsuits. TechCrunch reported that no settlement payment changed hands, and Rippling proceeded to release its MCP gateway.
The takeaway for founders is not that Runlayer or Rippling was legally right. The courts never reached that conclusion.
The useful question is what happens before a startup gives a prospective customer deep access to its product and team.
Three Common Founder Mistakes
- Treating every prospective customer like an ordinary user. An enterprise evaluation may expose information that would never be available through normal product use.
- Assuming an NDA answers every question. Founders should consider not only confidentiality, but also what the other party may do with product access, technical information, feedback, and evaluation materials.
- Sharing first and documenting later. Once sensitive information has been disclosed, contractual protections cannot retroactively change what the other party has already seen.
10-Minute Founder Self-Check
Before your next enterprise trial, ask:
- What information will this prospect see?
- Will our engineering teams interact directly?
- Are we sharing source code, architecture, or technical documentation?
- Are we sharing our product roadmap?
- Which information do we consider confidential?
- Do we have an NDA in place where appropriate?
- Do we have terms governing the product evaluation?
- Are permitted and prohibited uses of the trial clear?
- Are we protecting information we consider trade secret?
- What would concern us if this prospective customer launched a competing feature six months from now?
What to Do Next
Enterprise trials can be valuable sales tools. They can also involve giving sophisticated companies significant visibility into your technology.
Before opening that door, determine what the prospect actually needs to evaluate the product, what information should remain restricted, and what agreements should govern the evaluation.
Book a Discovery Call with Primum Law Group to discuss your needs and concerns: https://calendly.com/primumlaw/30min?month=2026-08