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Carlos Watsons Ozy Media Lawsuit Accuses Ben Smith, BuzzFeed and Semafor of Stealing Trade

Lawyers for Ozy Media, the defunct media and entertainment company founded by Carlos Watson, allege in a new lawsuit that Ben Smith, BuzzFeed and Semafor (the media startup co-founded by Smith in 2022) misappropriated Ozy’s trade secrets “for their own benefit.”

The suit additionally alleges that BuzzFeed breached a nondisclosure agreement it entered into with Ozy in 2019 as part of its efforts to buy the company. Lawyers representing Ozy Media allege that Smith, former BuzzFeed News editor-in-chief and New York Times media columnist who is currently editor-in-chief of Semafor, wrote “a series of hit pieces” about Ozy Media but that he did not disclose “his central role in BuzzFeed’s efforts to buy Ozy two years earlier” while he was at BuzzFeed.

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Reps for BuzzFeed and Semafor declined to comment. Smith did not immediately respond to a request for comment on the lawsuit.

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The lawsuit, filed Thursday in U.S. District Court for the Eastern District of New York, seeks unspecified monetary damages and that Smith and Semafor be “restrained and enjoined from misappropriating, disclosing or using Ozy’s Confidential Information and trade secrets.”

The lawsuit alleges that Smith “was given unfettered access to Ozy’s trade secrets during the BuzzFeed acquisition process” in September 2019, when BuzzFeed was exploring a deal to buy Ozy Media that it ultimately abandoned. That included “non-public information” related to “the actual or anticipated business and/or products, research or development” of Ozy, such as marketing, finance and other business materials, as well as information on Ozy’s customers.

Lawyers for Ozy Media accused Smith of copying Ozy’s business model to launch Semafor.

“After BuzzFeed went public and having seen Ozy’s playbook for launching, operating and generating revenue from a multiplatform media company during BuzzFeed’s attempt to buy Ozy, Ben Smith and his co-founder announced the creation of their own media company, Semafor — a spitting image of Ozy,” Dustin Pusch, a partner at Meier Watkins Phillips Pusch, the law firm representing Ozy, said in a statement

A story by Smith published Sept. 26, 2021, in the New York Times reported that Ozy Media falsified audience metrics and that COO Samir Rao impersonated a YouTube executive on a call with prospective investor Goldman Sachs.

Regarding the Times story, the lawsuit claims, “Watson was shocked that Ben Smith would even report on Ozy at all given the unprecedented access to Ozy’s trade secrets he had at BuzzFeed — and his strict obligations under the Mutual NDA.”

In March 2023, Ozy Media shut down after Watson was arrested and indicted on federal fraud charges the previous month. On Feb. 23, Watson was arrested in Manhattan and charged with conspiracy to commit securities fraud and conspiracy to commit wire fraud in what the Justice Department alleged was a scheme to defraud Ozy’s investors and lenders. Watson was also charged with “aggravated identity theft” for his role in the impersonation of “multiple media company executives” in communications with Ozy’s lenders and prospective investors in furtherance of the fraud schemes, federal prosecutors said.

Watson, as part of a series of posts on X (formerly Twitter) following his arrest and indictment, said he “will fight these charges with everything I have, and I look forward to my day in court.” He also wrote, “I am deeply disappointed by the government’s actions yesterday. I am not now and never have been a ‘con man.’ I am and have been, a hard-working entrepreneur who has helped build a special company from scratch.” He continued, “I’m not saying I haven’t made mistakes — I have. But it’s fair to ask, why I’ve been singled out? Ozy is a real and valuable company that was built through an enormous amount of hard work and sacrifice.”

Watson’s “con man” reference was regarding the U.S. Attorney’s Office for Eastern District of New York’s Feb. 23 press release about the indictment. Watson’s lawyers took issue with the U.S. Attorney’s description of him as a “con man” and Ozy Media as a “criminal organization,” among other things. In a request to the judge overseeing the case, Watson’s legal team asked the government to remove such “prejudicial language.” In a response filed Nov. 6, Judge Eric Komitee agreed with many of those contentions; the U.S. Attorney’s Office for Eastern District of New York removed the “con man” and “criminal organization” from the press release in a Nov. 16 update.

The lawsuit filed Thursday on behalf of Ozy Media, which Watson had launched in 2013, claimed that prior to Smith’s reports in the New York Times, “Ozy was a successful and thriving majority Black-owned multiplatform brand with five premium subscription newsletters, 12 TV shows, 10 podcasts, a unique awards program and a flagship events business anchored by Ozy Fest.”

A copy of the Ozy Media complaint is available at this link. Ozy Media is jointly represented by Alexander Sakin of Sakin Law in the matter.

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