Bodyfriend prone to legal battles

This is the first of a two-part series highlighting Korean massage chairmaker Bodyfriend's business strategy and management -- ED.

By Kang Seung-woo

This is the first of a two-part series highlighting Korean massage chair maker Bodyfriend’s business strategy and management.

Bodyfriend has emerged as the dominant manufacturer of massage chairs in Korea, but its success is being tarnished by the firm’s frequent feuds with rivals, believed to be aimed at exposing its own brand in what seems to be “noise marketing.”

Established in 2007, the lifestyle product maker also sells mattresses and water purifiers. It holds nearly 70 percent of the local massage chair market, adopting a lease-to-own system. Its revenue has risen from 143.8 billion won ($132.2 million) in 2014 to 366.5 billion won in 2016.

On the back of its success, its largest shareholder, local buyout fund VIG Partners, considers having the company go public soon.

En route to expanding its presence, however, the Seoul-based company has been tagged as a “bad player” in the industry, finding fault with its competitors over various issues, including in rental systems and patents.

In 2015, investors including VIG Partners, a local buyout fund, formed VFH, a special purpose company, to acquire a 90 percent share in the massage chair maker. The co-investment partners include Korean private equity fund Neoplux, an affiliate of Doosan Group, and Bodyfriend CEO Park Sang-hyun.

The history of Bodyfriend’s inter-industry conflicts dates to 2013 when the company accused Tong Yang Magic of copying its rental system for the latter’s sales of massage chairs. It asked the Fair Trade Commission (FTC) to ban Tong Yang’s promotion through a home-shopping channel. Also, Bodyfriend filed a 1 billion won damage suit against Tong Yang, the predecessor of SK Magic.

However, Tong Yang was cleared of all three charges by the antitrust watchdog and the Seoul Central District Court.

Kyowon, a renowned water purifier maker, became Bodyfriend’s next target.

From last December to early January, Bodyfriend’s executives and employees staged three rallies in front of Kyowon’s office building in Seoul, claiming one of Kyowon’s water purifiers infringed on its patent and design rights.

In response, Kyowon filed for an injunction against the protest which the court granted, prohibiting Bodyfriend from rallying within 100 meters of the rival’s office building.

Last year, Bodyfriend came under fire for publicly preventing local water filter maker Picogram from signing supply contracts, citing the latter’s infringement on its design rights. However, the court ruled in favor of Picogram.

In June 2014, the two sides jointly developed W Water Purifier, whose exclusive sales rights were obtained by Bodyfriend for two years. However, even after the contract expired and Picogram was granted a non-exclusive license to the product, Bodyfriend alleged the co-developer was violating its design rights. In that respect, Picogram provided the product to Kyowon later, drawing a backlash from Bodyfriend.

In April, it also lost a legal battle with a PR agency over unpaid advertising fees.

Critics suspect Bodyfriend’s consecutive yet unsuccessful nitpickings may have to do with noise marketing that is aimed at exposing its brand to consumers -- an inappropriate act for a market leader seeking to become a global health care company.

Bodyfriend rejected this speculation, though.

“Our actions had to do with protecting what we had achieved in the market,” its spokesman said. “It is pure guesswork. We had no need to do so.”

If the spokesman’s comments are right, observers came up with questions why the business bellwether that tries to make it to global markets continues to bring other players to court only to lose.

The spokesman refused to answer the question.