“SMOOTH” Move: Federal Court Saves Trademark Registrations From Summary Cancellation Based On New Evidence

On August 15, 2024, the Federal Court of Canada (the Court) issued its decision in Smooth Payment Inc. v Klarna Bank Ab, 2024 FC 1274, allowing Smooth Payment Inc.’s (SPI) application in part in its appeal of four summary cancellation decisions made pursuant to section 45 of the Trademarks Act.

On December 6, 2022, the Registrar of Trademarks (the Registrar) issued section 45 expungement notices for SPI’s trademark registrations: TMA924135 (SMOOTH), TMA924154 (SMOOTH PAYMENT), TMA1003778 (SMOOTH), and TMA1065265 (SMOOTH PAY) (collectively, the Registrations).  Following SPI’s failure to respond to the notices, the Registrar issued decisions to expunge the Registrations.

SPI appealed the decisions and filed evidence on appeal.  In considering whether there was material new evidence that warranted a de novo review, the Court noted that it was satisfied that SPI’s trademark agent was unaware of the section 45 proceedings and did not inform SPI about them.  Specifically, the Court found that the mailing labels for the notices were incorrectly addressed.  SPI’s evidence showed that it first became aware of the section 45 proceedings after its agent received the Registrar’s expungement decisions.

The Court proceeded to find that SPI’s new evidence was material because there was no evidence of use before the Registrar, the new evidence “fills a gap”, and it would have materially affected the Registrar’s decisions.

In determining whether the Registrations should be maintained, the Court noted that the burden of proof in section 45 proceedings “is light and evidence of use need not be perfect”.  The Court found that while SPI’s evidence could have been clearer, it demonstrated use of the “SMOOTH” marks with some, but not all, of the registered goods and services during the relevant period.  In contrast, the Court found that SPI failed to establish that it used SMOOTH PAYMENT or SMOOTH PAY in association with the listed goods or services.

Ultimately, the Court allowed SPI’s application in part, concluding that: TMA924135 (SMOOTH) should be maintained; TMA1003778 (SMOOTH) should be amended to delete certain specified descriptions of goods and services; and TMA924154 (SMOOTH PAYMENT) and TMA1065265 (SMOOTH PAY) should be expunged.

Summary By: Steffi Tran