Canada

The Patent Appeal Board has issued a redetermination to provide a preliminary review in connection with Canadian Patent Application No. 2,701,028, led by Barry Dusome and Wyatt Dusome, which relates to a method of playing a wagering poker card game. The redetermination was issued on May 5, 2026, and follows a redetermination ordered by the Federal Court. The ‘028 Application is directed to methods of playing a wagering poker game in which players split their starting hand into two hands and play consecutive sub-games as part of the overall game, combining elements of Texas Hold'em and Pai Gow poker with additional features including a showdown round against the dealer. The ‘028 Application was rejected following a Final Action dated November 22, 2018, which found that the claims were not directed to patentable subject matter under section 2 of the Patent Act, and indefinite under subsection 27(4). On May 29, 2024, the Commissioner refused to grant the ‘028 Application, considering the "actual invention" was the rules of a wagering poker game rather than the physical elements of the claims. On appeal, the Federal Court held that the Commissioner’s approach was incorrect: the focus must be on the claims as purposively construed, and the Commissioner must then consider whether the subject matter "add[s] new knowledge to affect a desired result which has commercial value.". The focus should not be on an independently identified "actual invention". Further, the Federal Court stated that "determining what in good faith the inventor actually discovered is a question that forms part of purposive construction", and that the Commissioner should consider whether the rules of the game and the use of playing cards and a computer are not the whole invention but only one of a number of essential elements in a novel combination. Accordingly, the Federal Court directed the Commissioner of Patents to consider the ‘028 Application afresh based on proposed amended claims and in accordance with the Federal Court's reasons. This decision was the latest in a line of Federal Court decisions that overturned the Commissioner's subject-matter eligibility determinations. On March 24, 2026, CIPO published a Practice Notice updating its framework for assessing patentable subject matter. The 2026 Practice Notice supersedes the 2020 Practice Notice (PN2020-04) and was issued in response to the Federal Court’s decision in Dusome. The 2026 Practice Notice reaffirms that: purposive construction precedes any determination of validity, including patentable subject matter; the subject matter defined by a claim is determined on the basis of a purposive construction conducted in accordance with the principles set out by the Supreme Court of Canada; in carrying out purposive construction, all elements set out in a claim should be considered essential, unless the inventor establishes otherwise or if essentiality is contrary to the language used in the claim. The 2026 Practice Notice provides considerations for determining the nature of the invention, including whether elements are described as well-known or presented with little detail, suggesting they belong to common general knowledge, and asking what the inventor has actually invented or claims to have invented. Further, once a claim has been construed, the subject matter must comply with the definition of "invention" in section 2 of the Patent Act (i.e., an art, process, machine, manufacture, or composition of matter), must not be a mere scientific principle or abstract theorem under subsection 27(8), and must not fall into a judicially excluded category such as a method of medical treatment. Claimed subject matter that includes a disembodied idea, scientific principle, or abstract theorem is patentable if the idea is part of a practical application that has physical existence or manifests a discernible effect or change — the "physicality requirement" implicit in the definition of "invention." Where a claim recites a computer, the computer is generally an essential element, but the mere fact that a computer is essential does not necessarily mean the physicality requirement is met. In computer-implemented inventions where there are additional physical essential elements, such as a measurement step, sensor, or output means like a robotic actuator, there generally is physicality. Where the invention does not extend beyond the computer, the analysis turns on whether the invention can be distinguished from a mathematical calculation merely programmed into a computer. If a computer merely processes an abstract algorithm in a well-known manner and the processing does not improve the functioning of the computer, then the computer is not part of “what has been discovered”, and the invention is not patentable subject matter. On the other hand, if processing the algorithm improves the functioning of the computer, the improved computer and its improved functionality impart physicality to the invention, and the subject matter is patentable. In summary, it appears that much of the analytical framework from the 2020 Practice Notice is preserved, but with some minor tweaks that attempt to incorporate the Federal Court’s analysis from the Dusome decision. The most significant change is that the 2026 Practice Notice does away with the concept of identifying the "actual invention" as a distinct analytical step after claim construction. In particular, there is no longer a requirement to draw a distinction between essential elements identified during purposive construction and elements that were "part of the actual invention," noting that an element could be essential for claim construction purposes but not necessarily part of the actual invention. In Dusome, the Federal Court criticized this two-step approach, and CIPO has responded by folding the inquiry into what the inventor "actually invented" into the purposive construction stage itself. Furthermore, the 2026 Practice Notice has removed the games prohibition since there is no per se prohibition on the patenting of games. The 2026 Practice Notice also elevates the physicality requirement to a more prominent position in the analysis. Where there is no physicality outside of the computer system, the question is now explicitly framed as the key inquiry: does the invention simply process an abstract algorithm in a well-known manner or does it improve the computer's own functioning? The guidance on what constitutes physicality looks into “Discernible" is interpreted as referring to physical effects or changes and attempts to clarify what counts as additional physical elements (e.g., measurement sensors that generate data, robotic actuators) versus conventional computer elements that do not supply additional physicality (e.g., keyboard, display, printer). The 2026 Practice Notice includes new worked examples, including the first machine-learning example addressing a neural network trained on historical weather, irrigation, and crop yield data. In that example, CIPO found that model sophistication does not matter: a detailed layered neural network is treated the same as a simple formula if neither addresses a computing problem. Domain-level improvements, such as better crop yields, are not sufficient unless acted upon by physical means. On redetermination, the Patent Appeal Board applied the revised framework and reached the same conclusion as it did initially: the ‘028 Application’s claims are preliminarily directed to non-patentable subject matter. The Board identified the person skilled in the art as a team comprising a poker game designer, a computer technician, and a software developer. The Board found that all claimed elements are essential. For claims 1–21 (physical cards), the Board concluded that the skilled person would understand the discovery to lie in the set of rules governing the poker game, because the physical cards are standard and their use to play poker games is part of the common general knowledge. The Board found that the physical cards are nothing more than a well-known tool used to implement the game, and their use does not add to human knowledge on the subject of poker games. The Board then concluded that claims 1–21 do not provide the "something more" required to satisfy the physicality requirement. For claims 22–24 (computer implementation), the Board similarly concluded that the discovery lies in the algorithm or set of programmable instructions coded on the computer readable medium, as there is no suggestion in the specification that the computer device or its components represent anything other than well-known computer components operating in a well-known manner, and there is no indication that the functioning of the computer is improved. The Board concluded that the computer merely acts in a well-known manner and that the only new knowledge lies in the algorithm for implementing the poker game. The Board rejected the Applicant's arguments that the computer was a "unique specifically programmed computer/server" that was "physically altered with permanently installed memory storage," finding instead that the computer device is merely a general-purpose, well-known computer specifically programmed to implement the game. The Board also rejected the Applicant's argument that the computer's functioning was "inherently improved" because the system could run two games at once or provide a better experience for participants, noting that improvements to the functioning of the computer could include improvements in memory usage or processing speed, neither of which was disclosed. The Board also considered the jurisprudence and found the conclusions were consistent: the claimed modifications to the rules of play do not constitute a new and innovative method of applying skill or knowledge, nor a contribution to the cumulative wisdom on the subject of poker games. The Board further found that the proposed amended claims would not alter the patentable subject-matter assessment, as the proposed amendments were not substantive in nature and did not add any limitations that would provide the "something more" required to meet the physicality requirement. Has anything really changed? On its face, the 2026 Practice Notice represents a meaningful doctrinal shift. The abandonment of the "actual invention" as a standalone analytical construct, the removal of the per se prohibition on games, and the elevation of the physicality question all reflect CIPO's responsiveness to the Federal Court's criticisms in Dusome and the broader line of jurisprudence on patentable subject matter. However, a review of the Board's redetermination in Dusome itself suggests that, in practice, the revised framework may produce substantially similar outcomes for applicants whose inventions can be characterized as abstract methods implemented on well-known tools. The Board reached the same preliminary conclusion as it had before that the claims are directed to non-patentable subject matter, applying the new framework as it did under the old one. The inquiry into "what has been discovered" has been relocated from a post-construction "actual invention" analysis into the purposive construction stage, but the substantive question remains functionally the same: where the only new knowledge lies in an abstract set of rules or algorithm, and the physical implementation involves only well-known instruments used in well-known ways, the physicality requirement will not be met without "something more". For inventors in the gaming, software, and AI spaces, the path to patentability in Canada continues to require demonstrating that the invention does more than implement an abstract idea on a generic platform: it must either involve additional physical elements or demonstrably improve the functioning of the computer itself. The Board’s redetermination of the ‘028 Application is a useful illustration that a doctrinal refinement does not always translate into a different result.

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) has published guidance on the implementation of a new administrative monetary penalties (AMP) framework under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA). While FINTRAC has held the authority to impose AMPs on reporting entities (REs) since December 30, 2008, the new AMP framework significantly enhances FINTRAC’s enforcement toolkit. This framework was enacted by the Strengthening Canada's Immigration System and Borders Act (Bill C-12) and took effect on March 26, 2026. It was introduced alongside other notable amendments to the PCMLTFA and associated Regulations, discussed in our earlier finance alert: Canada implements amendments to the PCMLTFA anti-money laundering and anti-terrorist financing regime. The discussion below provides a more detailed breakdown of the new AMP framework and its practical implications for REs. Transition and implementation At the outset, it is important to emphasize that FINTRAC will continue to assess compliance with the PCMLTFA and associated Regulations using the AMP policy applicable to the period under review. This policy is contingent on whether the period under review falls entirely before or after March 26, 2026. Specifically, where a review period falls entirely before March 26, 2026, FINTRAC will apply the pre-existing AMP policy, including the previous penalty amounts and enforcement processes. Conversely, violations occurring on or after March 26, 2026, are subject to the new AMP framework. To promote regulatory clarity and consistency, FINTRAC has confirmed that each examination will be assessed using a single set of compliance expectations for the entire review period. Key changes to the AMP framework Under the new AMP framework, FINTRAC will have the authority to: define prescribed violations and compliance order violations subject to penalties; apply increased maximum penalty amounts of up to 40 times the current limits; consider the ability to pay as part of the criteria for determining a penalty amount; require mandatory compliance agreements for prescribed violations; and introduce compliance orders as an additional enforcement tool. Increased maximum penalty amounts Under the pre-existing AMP framework, minor violations incur penalties of $1 to $1,000 per violation; serious violations range from $1 to $100,000 per violation; and very serious violations range from $1 to $100,000 per violation for individuals and $1 to $500,000 for entities. The limits apply to each violation individually, and multiple violations may result in a total amount that exceeds these limits. The new AMP framework proposes significantly increased penalties, potentially increasing them up to 40 times the existing limits. Specifically, for prescribed violations, the maximum AMP would increase to $4,000,000 for individuals (up from $100,000) and $20,000,000 for entities (up from $500,000). This framework also introduces penalties for contravention of compliance orders, discussed further below. These penalties can be substantial: for individuals, up to the greater of $5,000,000 or 3% of the individual’s income from domestic and foreign sources, and for entities, up to the greater of $30,000,000 or 3% of the entity’s gross revenue from domestic and foreign sources. Ability to pay as a criterion in determining penalty amounts Notably, the inclusion of “ability to pay” as an explicit criterion in determining penalty amounts marks a shift from the three pre-existing penalty criteria, which focused on: the purpose of the AMPs, which is to encourage compliance, not to punish; the harm done by the violation; and the REs’ history of compliance. Compliance agreements and compliance orders The new AMP framework introduces two key enforcement mechanisms. First, mandatory compliance agreements will be required in all cases where an AMP is imposed for a prescribed violation. REs that commit prescribed violations after March 26, 2026, will be required to enter into these mandatory compliance agreements. Second, compliance orders are introduced as a new enforcement tool, and contravention of a compliance order is designated as a distinct violation under the PCMLTFA. REs may also be subject to compliance orders in addition to any AMP imposed. Existing AMP procedures continue to apply While the new AMP framework enhances FINTRAC's enforcement tools, the core procedural elements of the AMP policy remain broadly intact. An RE subject to an AMP will receive a notice of violation detailing the penalty amount, payment instructions, and information on the right to make written representations to FINTRAC's Director and CEO within 30 days of receipt. If the penalty is paid, the RE is deemed to have committed the specified violations, concluding the process, and FINTRAC will publish the AMP details. Alternatively, REs may request a review by making written representations to the Director and CEO within 30 days of receipt, who will decide on a balance of probabilities whether the violation was committed and may impose the proposed penalty or a lesser amount. REs receiving a decision notice then have 30 days to appeal to the Federal Court of Canada, which holds the authority to confirm, set aside, or change a notice of decision. Conclusion REs must continue to meet all obligations under the PCMLTFA and associated Regulations. With the substantially increased penalty maximums, the introduction of compliance orders, and the mandatory compliance agreement requirement, the consequences of non-compliance have materially increased. FINTRAC is updating its administrative monetary penalties policy to reflect the key changes discussed above, which REs should continue to monitor. The updated policy will include: guidance on compliance agreements and compliance orders; and an updated approach to calculating penalties. If you are concerned that your business may be impacted, contact a member of our Financial Services or Compliance team for assistance.