Nintendo vs Palworld lawsuit: patents rejected and $30K damages

In 2024, Nintendo initiated a significant lawsuit against Pocket Pair, the developers of Palworld, a game widely perceived as a Pokémon ripoff. However, the lawsuit appears to have backfired, with most of Nintendo's new patent applications being rejected and the potential damages capped at a mere $30,000. This situation has led to widespread public support for Palworld, even among Nintendo's own customers, suggesting a more complex narrative than a simple case of intellectual property infringement.

The Pokémon Empire and the Rise of Palworld

Pokémon stands as the largest media franchise globally, generating over $115 billion in revenue. This figure surpasses the combined earnings of Star Wars, the Marvel Cinematic Universe (MCU), and Harry Potter. Its immense success is not solely due to its games but also its extensive merchandise. Given this financial juggernaut, Nintendo is highly protective of the Pokémon brand, which explains their reaction to Palworld.

On June 5, 2021, Pocket Pair unveiled a trailer for Palworld, showcasing a world where players capture and battle animal-like creatures called "Pals" for base building, traversal, and combat. The similarities to Pokémon were evident, including the mechanic of weakening creatures and throwing a sphere to capture them. However, Palworld distinguished itself with a more adult tone, featuring Pals wielding guns and working in ethically questionable factories. The trailer quickly garnered millions of views, with many labeling it "Pokémon with guns."

Initial reactions on the internet were mixed, with some accusing Pocket Pair of blatant copying and others criticizing Nintendo for its history of aggressively pursuing fan-made content. Despite the controversy, things remained relatively quiet until Palworld's early access launch in 2024.

Palworld's Explosive Success and Nintendo's Response

Within four weeks of its early access release, Palworld sold 25 million copies, making Steam history as the first game since PUBG to exceed 2 million concurrent players. This success led to the formation of Palworld Entertainment, a collaboration between Sony Music, Aniplex, and Pocket Pair, aimed at expanding the IP. Pocket Pair CEO Takuro Mizobe noted that the game's launch was so massive that the company struggled to manage the profits.

However, this success was accompanied by growing backlash. Thousands of social media posts highlighted new similarities between Palworld and Pokémon. Mizobe even had to publicly address death threats sent to Palworld's artists, emphasizing that he was responsible for the overall production. The discourse intensified, with some pointing out that the first Pokémon game itself shared design elements with Dragon Quest 5.

Finally, Nintendo issued a statement acknowledging the inquiries regarding Palworld and declared its intent to investigate and take appropriate measures against any intellectual property infringement.

The Lawsuit: Patents, Mechanics, and Public Opinion

Nintendo's lawsuit primarily focused on three Japanese patents: * JP7545191 and JP7493117: Covering creature capture and release mechanics. * JP7528390: Covering real-time switching between ridable companions.

These patents were filed in December 2021, after Palworld was revealed, and published in 2024. The patent infringement lawsuit was filed in Japan on September 18, 2024, seeking an injunction and damages. Pocket Pair responded by stating they were unaware of the specific patents they were accused of infringing and expressed regret over the time and resources that would be diverted from game development.

Despite Nintendo's legal action, public sentiment largely favored Pocket Pair. Fans on YouTube, Reddit, and gaming forums sided with Palworld, contributing to its record-breaking sales. This support stemmed from two main reasons:

1. Declining Pokémon Quality: For the past decade, Pokémon games have been criticized for their declining quality, including choppy frame rates, lack of polish, and premium price tags. Fans felt they were paying a "Pokémon tax" for the name rather than the quality. The 2019 release of Sword and Shield faced heavy criticism for its poor production quality, despite its $60 price tag.
2. Palworld Filling a Void: Palworld, despite its own technical issues, was perceived as smoother, more stable, modern, and sharper than recent Pokémon titles. Many felt it delivered the classic Pokémon experience that Nintendo had failed to provide.

When Nintendo sued, many viewed it as an attempt to stifle innovation and competition rather than protect legitimate IP. Legal experts suggested Nintendo was attempting to create a "patent thicket" – a multiplicity of patents sharing a common context to block all potential competitors.

Nintendo's History of Legal Battles

Nintendo has a long history of aggressive legal action: * They lobbied the US Congress to prevent video game rentals and sued Blockbuster for photocopying Nintendo manuals. * They pursued console emulators, leading to a $2.4 million settlement and shutdown for a Switch emulator developer, and blocking others like Dolphin and Ryujinx from Steam. * The owner of LoveROMS was ordered to pay over $12 million and received a three-year prison sentence. * In 2018, Nintendo sued Japanese developer Kalapo over a virtual joystick in a mobile game. * They routinely target their own fans, shutting down a major Smash Bros. esports circuit despite organizers being in contact with Nintendo for a year, and consistently closing down fan projects.

This history has given Nintendo a reputation for being litigious, and the Palworld case further exacerbated this perception, with many calling it a clear case of bullying by a larger, older company.

The Tide Turns: Patent Rejections and Narrowed Lawsuit

Initially, the lawsuit seemed to favor Nintendo. Pocket Pair made changes to Palworld, removing the "Palister" mechanic (resembling a Pokéball) and restricting Pals from being used for gliding, instead requiring ordinary gliders. These changes were confirmed to be a result of the ongoing litigation.

However, the major battle was over the patents. Pocket Pair presented extensive "prior art," citing older games like Ark, Zelda, Titanfall 2, Far Cry 5, and Rune Factory Fry to demonstrate that the mechanics Nintendo was trying to patent had existed for years.

In October 2025, Japan's patent office rejected one of Nintendo's key patent applications, agreeing that similar mechanics had already appeared in games like Ark. This was a significant validation for Palworld.

The situation worsened for Nintendo in November when the US Patent Office agreed to re-examine one of Nintendo's patents, an unusually rare decision. In March 2026, all 26 claims of that patent were rejected on the grounds of "obviousness." This legal principle prevents the patenting of innovations that would have been obvious to a person with ordinary skill in the art at the time of filing. The argument was that patents protect physical innovations where copying is easy and supply is limited, which doesn't apply to game ideas.

Another blow came when Japan's patent office rejected a divisional application from Nintendo for a monster-capturing patent. The JPO cited a 2013 Pokémon fan game as proof that the idea lacked an innovative step. Nintendo objected, arguing it was a fan game that infringed their copyrights and was merely a video. Hilariously, the JPO sustained its rejection, stating that copyright has no bearing on determining an innovative step. The JPO's response indicated growing irritation with Nintendo's arguments, emphasizing that the logical structure of their refusal remained unchanged regardless of how characters were described.

By mid-2026, many legal experts believed Nintendo had lost the most important battle. They had virtually no chance of stopping the current version of Palworld. Even if Nintendo eventually won, it was estimated they would receive only around 5 million yen (approximately $30,000), a minuscule amount compared to Nintendo's size and legal expenses.

Palworld 1.0 and the Future of Gaming

As the lawsuit concluded, Palworld launched its full 1.0 version, once again achieving massive success with 1 million concurrent players. Despite adding more Pals that bore striking resemblances to Pokémon, Pocket Pair maintained its $29.99 price point, offering a vast amount of content. Palworld has now sold more copies than almost any Pokémon title, albeit at a lower price.

Meanwhile, Pokémon games have become more expensive. This situation has led to hopes that Palworld's success might push Nintendo to focus on developing higher-quality Pokémon games. Many players speculate that future Pokémon titles might incorporate elements inspired by Palworld's approach.

This case highlights how patents, intended to protect innovation, can be weaponized to monopolize ideas, potentially hindering progress. The Palworld story is seen by some as a market correction, where a company (Pocket Pair) served customers better when the incumbent (Nintendo) failed to meet expectations. This free-market dynamic encourages competition and pushes original companies to improve their products.