Korea start-up Algocare accuses Lotte Healthcare of stealing its AI-powered tech

A Korean startup has accused the Lotte conglomerate of stealing its AI-powered nutrient dispenser technology and using it in their own product. In order to prevent further violations of small businesses, one of the Korean government's ministries will find a resolution, either through mediation or litigation.

Algocare is a Korean healthcare startup recognized for winning the CES Innovation Award for three consecutive years, while the company it is accusing is Lotte Healthcare, owned by Korea’s fifth-largest conglomerate Lotte.

Algocare's CEO Joung Ji-won was taken aback when the guests at the company’s booth at CES 2023 notified her that they had seen a similar product named Cazzle at Lotte Healthcare's booth.

She claimed that over the course of several meetings from September to October 2021 to discuss potential partnership and growth strategies, Lotte gathered information about Algocare’s "Nutrition Engine," a cartridge-type nutrient dispenser.

“Lotte Healthcare, along with Lotte Ventures, approached the company and said that they had no intention of developing a product, but wanted to introduce Algocare products in the Lotte Healthcare platform,” Joung said.

“After the investment discussion broke down, both companies suddenly changed their words and demanded that they would give Algocare a license fee to make its own product,” she continued.

Joung even claimed that an employee of Lotte Healthcare used a photo of Algocare to ensure that the same business model would not violate any laws on "e-People," a government-run website that handles complaints against government agencies.

Joung said to Korea Biomedical Review: "We plan to take all legal action, both civil and criminal, after judging Lotte Healthcare’s action as a violation of the Fair Trade Act and the Unfair Competition Prevention Act.”

Lotte Healthcare has denied the allegations by clarifying that its Cazzle dispenser and Algocare's Nutrition Engine use different technologies.

“After the investment discussion with Algocare broke down, we decided to manufacture our own dispenser that fits the business direction, and the dispenser and cartridge were manufactured by referring to the automatic tablet sorting and packaging system machine used in commercial pharmacies,” Lotte said.

To prevent technological theft from small- and medium-sized businesses, the Ministry of SMEs and Startups in Korea is currently looking into Algocare’s infringement and is prepared to cover the cost of litigation if mediation is unsuccessful.

PitchMark helps innovators deter idea theft, so that third parties that they share their idea with get the idea but don’t take it. Visit PitchMark.net and register for free as a PitchMark member today.