The ”copycat controversy” that has erupted in the Korean startup ecosystem with healthcare startup Algocare alleging Lotte Healthcare of stealing its product idea is now being investigated by Korea’s Fair Trade Commission. Algocare, an AI healthcare startup, has alleged that Lotte Healthcare has stolen its AI-backed nutrient dispenser business idea and launched a copycat product.
Korea’s Fair Trade Commission launched an onsite investigation into Lotte Healthcare and others in connection with the suspicion of stealing business ideas from startup Algocare this week. Algocare is an artificial intelligence-based personalized nutrition management solution founded in 2019; It launched a product that provides personalized nutritional combinations on an IoT device equipped with a nutrient cartridge. Algocare has received four Innovation Awards for three consecutive years at CES, the world’sworld’s largest consumer electronics exhibition.
Incidentally, the allegation of a copycat also came up during the CES 2023 exhibition. Algocare claimed on January 18 that Lotte Healthcare used investment as bait to steal business ideas and put out similar products. Algocare reported to the Fair Trade Commission on January 25 to investigate the case.
According to industry sources, the Fair Trade Commission has sent investigators to Lotte Holdings, Lotte Healthcare, and Canon Korea, a subsidiary of the Lotte Group, to conduct onsite investigations. Lotte Healthcare is a subsidiary of Lotte Group, a South Korean multinational conglomerate with retail, food & beverages, tourism, and chemical/engineering & construction businesses.
The inclusion of Canon Korea in the field investigation is believed to be because Lotte Healthcare commissioned Canon Korea to produce its dispenser after ending investment discussions with Algocare in 2021. The Fair Trade Commission is expected to examine whether Lotte Healthcare unfairly interfered with Algocare business activities. The Fair Trade Act defines an act of unfairly using the technology of another business operator to interfere with the activities of the business operator to the extent of causing considerable difficulties as an unfair trade act.
Also, the Korean Ministry of SMEs and Startups has expressed its intention to intervene in the case actively. The Ministry of SMEs and Startups visited the headquarters of Algocare last month with a public official and lawyer in charge of the administrative investigation to confirm the facts. Later, it visited Lotte Healthcare to conduct administrative research.
The Ministry of SMEs and Startups said, “If a victim company applies for an administrative investigation of technology infringement and mediation of technological disputes, we will make efforts to achieve mediation quickly and plan to support litigation costs if mediation is not successful.” Algocare plans to report to the Korean Intellectual Property Office, apply for mediation by the Ministry of SMEs and Startups, and proceed with criminal and civil lawsuits.
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