Algocare, a Korean healthcare startup, said that the Fair Trade Commission (FTC) has launched a full-scale investigation into whether Lotte Healthcare stole Algocare's idea in developing Cazzle, Lotte Healthcare's nutrient dispenser.
According to Algocare, the anti-trust watchdog sent investigators to Lotte Holdings, Lotte Healthcare, and Lotte Group affiliate Canon Korea to conduct on-site investigations.
The FTC began the investigation at the request of Algocare on Jan 25.
Algocare said Canon Korea was included in the investigation as Lotte Healthcare commissioned Canon Korea to produce a dispenser after Lotte terminated investment discussions with Algocare in 2021.
The dispute between the small-sized startup and the unit of retail giant Lotte regarding the origin of the nutritional supplement machine started after Algocare CEO Joung Ji-won raised such allegations on Jan. 18.
Joung said Lotte Healthcare obtained information about Algocare's "Nutrition Engine," a cartridge-type nutrient dispenser, and business strategy information, in a 2021 meeting with Algocare.
According to Joung, Algocare received offers from Lotte Ventures and Lotte Healthcare for investment and business cooperation from September to October 2021, and met with Lotte Healthcare Executive General Manager Woo Woong-jo.
During the meeting with Woo, Algocare shared information on its products and business strategies under development, Joung said. She did not sign a “non-disclosure agreement” with Lottee at that time because Lotte Healthcare was not a listed company, Joung said.
"However, after the discussion on Algocare investment broke down by the end of October (in 2021), Lotte Healthcare introduced a new nutritional supplement dispenser product similar to Algocare during the 2023 Consumer Electronics Show (CES) held in January," Joung said.
As a result, Joung decided to take all legal actions, both civil and criminal, against Lotte Healthcare.
Regarding the allegations, Lotte Healthcare had explained that Cazzle was a common concept abroad and that the company had the idea to develop Cazzle from the beginning of its establishment.
Algocare was established in November 2019 as a healthcare startup. The company won the Innovation Award at CES with Nutrition Engine and is about to release the product in March.