Lotte Healthcare Faces Lawsuit Over Allegations of 'Copying' from the Start

Key Issues Are Business Model and Product 'Originality'
Lotte: "Idea Already Exists Overseas"
Algo: "Offers License Fee Payment, Acknowledges Originality"

Algocare: "Will Take Legal Action Including Lawsuits"

[Asia Economy Reporter Lee Chun-hee] Lotte Group's new healthcare business, touted as a new growth engine, is facing allegations from the start that it copied the startup 'Item,' and there are signs that the dispute may escalate into a lawsuit.

Jung Ji-won, CEO of healthcare startup Algocare, stated on the 18th, "Lotte Healthcare, which proposed investment and business cooperation a year ago, copied Algocare's business idea and developed a product," adding, "We are taking legal action."

Both Algocare and Lotte Healthcare participated in the world's largest electronics and IT exhibition CES 2023, unveiling new personalized supplement dispenser products. The concept involves placing multiple supplements that a person takes into one machine (dispenser), which then automatically dispenses a single dose at a time to improve convenience.

Algocare claims that Lotte Healthcare's newly introduced 'Pilkey' was created based on core technical information of Algocare's personalized supplement dispenser 'Nutrition Engine,' which was discussed for cooperation with Lotte Ventures and Lotte Healthcare in 2021.

The key issue here is the originality of the business model and product of the personalized supplement dispenser. CEO Jung explained, "There were already open-type dispensers overseas where consumers poured supplements themselves," adding, "To address the problems related to this, we developed a sealed cartridge with a chip containing various information." However, she alleges that Lotte Healthcare copied this concept without permission. The product is currently in the patent application stage and has not yet secured a patent.

Aerial view of Lotte Healthcare's CES 2023 exhibition booth [Photo by Lotte Healthcare]

On the other hand, Lotte Healthcare acknowledged contact with Algocare but denied copying the idea. A Lotte Healthcare official said, "After deciding to enter the healthcare business and focusing on supplements as one direction, we did contact Algocare," adding, "However, the business directions did not align, and the contact was terminated. Since then, we have independently pursued the supplement dispenser business as originally planned, so we do not agree that we copied Algocare's idea."

For example, the supplements provided under Algocare's current product specifications are all standardized to be 4mm or smaller. This means that various supplements produced by pharmaceutical companies cannot be used, requiring reformulation, which led to a mismatch between Algocare's goals and Lotte Healthcare's business direction, making continued cooperation impossible.

Lotte Healthcare also emphasized that the concept of a supplement dispenser is not unique to Algocare but is already widely used. The official argued, "Overseas, both open-type dispensers and cartridge methods are already in use," adding, "It is difficult to accept the logic that only Algocare can produce such products domestically when various companies sell similar products internationally."

However, CEO Jung countered, "Lotte Healthcare even proposed paying a 'license fee' for the device and patents," questioning, "If they did not acknowledge Algocare's originality, why would they offer to pay a license fee?"

CEO Jung stated, "We are preparing legal responses," and added, "We plan to file a complaint with investigative authorities on charges such as trade secret infringement and also report to the Fair Trade Commission."