Nintendo may only receive a $30,000 payout if it wins its high-profile legal battle with Palworld developer Pocketpair, an IP expert has said. But it’s looking increasingly likely that Nintendo will lose.
Nintendo and The Pokémon Company are currently embroiled in ongoing litigation with Pocketpair in Japan, with patents that revolve around how Pokémon games work at the heart of the lawsuit.
Palworld arrived on Steam priced $30 and launched straight into Game Pass on Xbox and PC in early 2024, breaking sales and concurrent player number records in the process. Pocketpair boss Takuro Mizobe has said Palworld’s launch was so big that the developer couldn’t handle the massive profits the game generated. Still, Pocketpair acted swiftly to capitalize on Palworld’s breakout success, signing a deal with Sony to form a new business called Palworld Entertainment that’s tasked with expanding the IP. It later launched the game on PS5.
After Palworld’s huge launch, comparisons were made between Palworld’s Pals and Pokémon, with some accusing Pocketpair of “ripping off” Pokémon designs. But rather than file a copyright infringement lawsuit, Nintendo and The Pokémon Company went down the patent route. In the initial lawsuit, the two companies called for 5 million yen (approx $30,000) each plus late payment damages, as well as an injunction against Palworld that would block its release.
In November 2024, Pocketpair confirmed the three Japan-based patents, which revolve around catching Pokémon in a virtual field, it was being sued over. Palworld did include a mechanic that involved throwing a ball-like object (called a Pal Sphere) at monsters out in a field to capture them, similar to the mechanic seen in the 2022 Nintendo Switch exclusive Pokémon Legends: Arceus.
Pocketpair subsequently made changes to Palworld it admitted were the direct result of the legal threats. Patch v0.3.11, released in November 2024, removed the ability to summon Pals by throwing Pal Spheres and instead changed it to a static summon next to the player. Several other game mechanics were also changed with this patch. At the time, Pocketpair said that if it hadn’t made these changes to Palworld, “the alternative would have led to an even greater deterioration of the gameplay experience for players.”
Then, in May last year, Pocketpair changed the game again so that gliding would be performed using a glider rather than with Pals. Pocketpair called these changes “compromises” the studio was being forced to make out of fear of an injunction being granted that could block the development and sale of Palworld.
“We understand that this will be disappointing for many, just as it is for us, but we hope our fans understand that these changes are necessary in order to prevent further disruptions to the development of Palworld,” Pocketpair said at the time.
Now, writing on games fray, IP expert Florian Mueller said that late last year, Nintendo and The Pokémon Company amended the scope of their claims so the case was limited to older versions of Palworld, as opposed to all Palworld versions. The belief here is that they did so because of the changes Pocketpair made to the way Palworld worked in response to the lawsuit, as outlined above.
The upshot of this, Mueller said, is that “we cannot see any pathway to victory over any current or very recent Palworld version (nor Palworld 1.0, which should launch soon) for Nintendo. There will be no injunction with real-world impact.”
And even if Nintendo wins its case against the older versions of Palworld, the most it could get in terms of a payout is 5 million yen (approx. $30,000). “That is chump change for either party, and just a rounding error compared to Nintendo’s litigation expenses,” Mueller.
That’s because there was only a short window, with limited sales volume in Japan only, for which Nintendo can seek damages. Nintendo brought divisional patent applications only after Palworld’s launch in January 2024, and Pocketpair made changes to the way the game works that November.
“Even if we assume, for the sake of the argument, that there was some infringement in 2024, it was a short period, the sales volume was limited, and Nintendo cannot recover damages on worldwide sales in Japan: a Japanese patent is valid only in Japan, like a U.S. patent is valid only in the United States,” Mueller explained.
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“This litigation is no longer about anything serious in commercial terms. It’s about a hypothetical injunction that doesn’t apply to current product versions and (if anything) a small damages award for a period during which Pocketpair generated limited new sales in Japan.”
Could Nintendo pivot away from its patent claim and take on Pocketpair with a fresh lawsuit in another country? That’s one option, but Mueller said that Nintendo may be put off doing because of how hard it’s been to obtain game-rule patents in key jurisdictions. For example, in April, the USPTO rejected Nintendo’s controversial ‘summon character and let it fight’ Pokémon patent, after it was heavily criticized by IP lawyers.
We should get some resolution to all this later this year. The court has scheduled a presentation of evidence for October 1, and will express an opinion on November 9, 2026. Meanwhile, Palworld 1.0 fast approaches: it’s due out July 10.
Wesley is Director, News at IGN. Find him on Twitter at @wyp100. You can reach Wesley at [email protected] or confidentially at [email protected].
