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Hey guys, quick note before we get into the video. I've been pretty busy moving between states and working on my startup, Silo. So, my brother is filling in for me on this video. Let me know what you think in the comments. With that out of the way, let's get right into it. In 2024, Nintendo launched a major lawsuit over a game that seemed like a pretty clear Pokémon rip-off, but they probably didn't expect it to backfire so bad. Most of their new patents are being rejected, and the most they can win is just $30,000. But, this gets even weirder. Why does everyone, including Nintendo's own customers, seem to be on the side of the copycat? Maybe the story isn't so black and white.
Pokémon is, by far, the largest media franchise on Earth. Seriously. To date, it's made well over $115 billion in revenue. Few entertainment franchises even come close. That's more than Star Wars, the MCU, and Harry Potter. More than any two of those combined, too. Pokémon is a behemoth, but it's not just the games that make it a cash cow, but all of the merchandise from those iconic designs. Given the absurd money this brand makes, Nintendo are fairly protective of it. Which might explain their reaction to Pal World. On June 5th, 2021, developer Pocketpair revealed a trailer for Pal World.
It showed a world where players can use animal-like creatures called Pals to battle and capture in order to use them for base building, traversal, and combat. This feels pretty familiar to Pokémon. Some of these have pretty clear or blatant inspirations. To even capture characters, they have to be weakened and thrown into a sphere similar to the Poké Ball used in Pokémon. Though, there was a big difference. Unlike Pokémon, Pals can carry guns as well as work in large ethically questionable factories. Palworld was clearly going for a more adult audience, and the trailer racked up millions of views very quick. Some viewers thought the game was fake, while others labeled it Pokémon with guns.
Even IGN labeled the trailer a Pokémon-like shooter game. The internet was flooded with people calling out the developers. Any delay of action by Pokémon is just them building their case. They're a $65 billion company that got small fan-made content when it infringes, even though it's free and made for fun. But, it definitely wasn't one-sided. Regardless, things were fairly quiet for now. Though, in the background, Nintendo were preparing for war. Then, at last, in 2024, Palworld launched in early access. Within 4 weeks, 25 million players had bought the game. It made Steam history, becoming the first game since PUBG to exceed 2 million concurrent players. This crashed the servers.
Even today, Palworld still holds the third largest all-time record for the most players online simultaneously on Steam, the largest video game marketplace. This led to a deal between Sony Music Entertainment, Aniplex, and Pocket Pair to form Palworld Entertainment to expand the IP. Pocket Pair were on top of the world. "Thank you so much for making us the third highest concurrent played game on Steam ever. We are working hard to make the game as enjoyable as possible. Thank you." CEO Takuro Mizobe also said Palworld's launch was so big that the company couldn't handle the massive profits the game generated. But, underneath the success was a brewing backlash.
Almost every day, thousands of tweets would discover new similarities between Palworld and Pokémon. It got to a point where CEO Takuro Mizobe called out people who sent death threats to Palworld's artists. All aspects of production are supervised by various people within the company. And I am responsible for the overall production. It would be appreciated if you could cease sending abuse towards the artists. People also began pointing out that the first Pokémon game shares a lot of designs with other game, Dragon Quest 5. The discourse was growing.
Was it a copycat? Then, at long last, Nintendo decided to respond. We have received many inquiries regarding another company's game released in January 2024. We intend to investigate and take appropriate measures to address any acts that infringe on intellectual property rights related to Pokémon. Nintendo prepared for a major lawsuit. But, strangely, this lawsuit wasn't all about these designs at all, but something else entirely. Nintendo's lawsuits centered on three Japanese patents. JP7545191 and JP7493117 covering creature captures and release mechanics, and JP7528390 covering real-time switching between ridable companions.
Also, one notable US patent. But, these are a bit weird. Palworld was revealed on June 5th, 2021. These initial patents were first filed in December 2021. These were soon published in 2024 in the US and Japan. The patent infringement lawsuit was filed in Japan on September 18th, 2024. They sought an injunction and damages on the grounds that Palworld infringes multiple patent rights. Nintendo will continue to take necessary actions against any infringements of its intellectual property rights to protect
the intellectual property it has worked hard to establish over the years. Pocketpair addressed the lawsuit in an official statement. At this moment, we are unaware of the specific patents we are accused of infringing upon and we have not been notified of such details. It is truly unfortunate that we will be forced to allocate significant time to matters unrelated to game development due to this lawsuit. However, we will do our utmost for our fans and to ensure that indie game developers are not hindered or discouraged from pursuing their creative ideas. Looking only at the headlines, Nintendo's lawsuit seemed completely justified.
Instead, many fans turned on Nintendo. Across YouTube, Reddit, and gaming forums, people seemed to side with Pocketpair. Hence, the record-shattering sale in a matter of days. There are two big reasons, both connected and both important. For the last decade, Pokémon has under-delivered with each new release, and Palworld seems to be filling the space left by Nintendo's failures. First, its games have become notably choppier with lower frame rates and less polish to the point where they're no longer keeping up with the competition. Yet, despite all of that, it still carried a premium price tag. Many fans felt they were paying a
Pokémon tax, buying the name more than the quality. The warning signs were already there. In 2019, Sword and Shield launched to heavy criticism with players calling out its poor production quality, which, by the way, still cost $60. And if you want to increase the frame rate, you will buy the newest console and pay an extra 10 to 20 dollars. It felt like Pokémon wasn't even trying. But customers were still hungry for that classic Pokémon experience, and Palworld filled that void. Palworld had a few technical issues, too, but it was far smoother, stable, modern, and sharp. It felt like someone had finally decided to make a good Pokémon game.
We shouldn't compare it to Pokémon. That would be an insult to Palworld. It's actually better than the last few Pokémon games. And when Nintendo sued, customers felt they were trying to stifle innovation and competition more than protect their IP. Someone finally made a good Pokémon game, and Nintendo tries to shut it down? What Nintendo is trying to do with the three patents in suit of this litigation, and possibly others that are in the making, is to create a patent thicket. A multiplicity of patents sharing a common context in an attempt to block all roads. What Nintendo wants to achieve is that Palworld cannot be Palworld because as long as its game mechanics of capturing monsters is the one it is, there will be some Nintendo
patent in Japan that stands in the way. Roadblock after roadblock. But by this point, Nintendo had become known for taking anyone to court. They lobbied US Congress to stop video games being rented in stores like Blockbuster, then sued Blockbuster for photocopying Nintendo manuals. Nintendo also went after console emulators. It sued the developers of a Switch emulator who settled for 2.4 million dollars and shut their project down. They blocked another, Dolphin, from being released on Steam. Same with another called Ryujinx.
The owner of LoveRoms were ordered to pay over 12 million dollars, and one even got 3 years in prison and was left with millions of dollars in debt. This wasn't even Nintendo's first patent lawsuit over gameplay mechanics. Back in 2018, it sued Japanese developer Colopl over a virtual joystick in a mobile game. Yeah, they also routinely go after their own fans. They ordered a major Smash Bros. eSports circuit to be shut down despite the organizers being in contact with Nintendo for 12 months. Fan projects are consistently shut down. Needless to say, Nintendo doesn't have a great reputation around its legal fights. And Palworld's case makes it much worse.
It is a clear case of bullying. Nintendo is a far older and larger company than Pocketpair with extensive experience in patent prosecution and patent infringement litigation. If, however, companies write patent applications that are effectively just smoke screens, the net effect is that companies monopolize game rules. That would set a terrible precedent for the industry. It's fair to call Nintendo the Disney of gaming. Which brings us back to the lawsuit. In September 2025, the US patent was approved. The main claims were for a sub character to appear and be controlled while fighting an enemy. And for the sub
character to automatically fight enemies when it's somewhere else, not near the player. But this one was especially weird because of how quick it was approved. It essentially was waved through without much pushback, which didn't happen. Did Nintendo suddenly have an uncontested monopoly over common ideas and mechanics? Was everyone now beholden to Nintendo? If you've watched this far, you probably enjoy our videos. So, consider subscribing. Thanks. At first, the lawsuit seemed to be going exactly the way Nintendo wanted. Rather than fight over every patent mechanic, Pocketpair changed the game.
The studio removed the Pal Sphere mechanic that resembled Pokémon's Poké Ball. Even more surprisingly, pals could no longer be used for gliding. Instead, players had to use ordinary gliders, a change many never expected to see. Pocketpair later confirmed that these changes were made because of the ongoing lawsuit. Several other game mechanics were also changed with this patch. As many have speculated, these changes were indeed a result of the ongoing litigation. And we have had to make certain compromises in order to avoid disruptions to the development and distribution of Palworld. But the big battle was the patents. Pocketpair presented a long list of prior art to show invalidity of Nintendo's claims. A
long list of older games including Ark, Zelda, Titanfall 2, Far Cry 5, Rune Factory 5, and many more, arguing these mechanics had existed for years. Then something unexpected happened. In October 2025, Japan's Patent Office rejected one of Nintendo's key patent applications, ruling that similar mechanics had already appeared in games that Pocketpair mentioned, notably Ark. Hugely validating for Palworld. But it got even worse for Nintendo. There was quite an uproar about Nintendo trying to patent all these game mechanics. In November, the US Patent Office agreed to re-examine one of Nintendo's patents, an
unusually rare decision. Since the re-examination process was introduced in 1981, only about 175 out of roughly 15,000 requests had been approved. Upon re-examination, it was rejected in March 2026. All 26 claims were rejected. So, why? Obviousness. Even if nobody did the exact combination first, was it an obvious step any competent designer would take? Obviousness in this case is a legal ground that prevents the patenting of innovations that would have been obvious to a person having ordinary skill in the art at the time of filing. Plus, patents exist to protect physical innovations where copying is easy and supply is limited. Games aren't like that. The idea is a cheap part. Nobody
is going to buy a worse clone just because it summons monsters the same way. Nintendo quietly narrowed its lawsuits to older versions of Palworld after Pocketpair updated the game. By mid-2026, the lawsuits had entered its final stage. Then, another blow. Another divisional application from Nintendo, a monster catching patent, was rejected by Japan's Patent Office. The JPO pointed to a 2013 Pokémon fan game as proof the idea lacked an innovative step in Nintendo's patent application. Nintendo formally and strongly objected to this as this is a fan game, which they believe infringed upon its copyrights. And that it was merely a video. And, hilariously, the JPO sustained its rejection because copyright has no
bearing on determining an innovative step. The company stated, "Ash, Pikachu, and Pokéball should properly be referred to as a character infringing upon Ash, a character infringing upon Pikachu, and a character infringing upon Pokéball, respectively. The mere possibility that the reasons for rejection could be subject to such an unreasonable misunderstanding has no bearing on the assessment of innovative step. If it was impermissible for the reasons for rejection to refer to character names, then even at the cost of being redundant, accuracy should take precedence. In that case, the notice would need to use cumbersome descriptions such as an object in the form of a small animal instead of Pokémon, an object in the
form of a boy wearing a red cap instead of Ash, an object in the form of a small yellow animal instead of Pikachu. However, even with such rephrasing, the logical structure of the grounds for refusal remains unchanged. Therefore, this argument has no bearing on determining inventive step. Seems the JPO is getting a bit irritated at Nintendo. But by now, many legal experts believed Nintendo had already lost the battle that mattered most. Nintendo had virtually no chance of stopping the current version of Palworld. Even if Nintendo eventually won, Mueller believed the company would likely receive only around 5 million yen.
Roughly $30,000, a tiny amount for the size of Nintendo or how much that they must have spent on legal fees. As the lawsuit was wrapping up, Palworld finally launched 1.0, the fully finished version of the game. And it felt like 2024 all over again. The launch of Palworld 1.0 was a mass success, rising back to 1 million concurrent players. Though, they've also added more pals, which are pretty blatantly similar to Pokémon. But Pocket Pair also stuck to its original $29.99 price despite the huge list of added content. And they've now sold more copies than almost any Pokémon title. Granted, at a lower price. Meanwhile, Nintendo appears to be moving in the opposite direction with Pokémon games becoming more expensive.
Maybe now Palworld has finally pushed Nintendo to focus on making better quality games. Even players are hoping, too. I wouldn't be surprised if next Pokémon is somehow will be one of the best recent ones just to attract people back. Also, wouldn't be surprised if they change nothing because it sells anyways. I've been curious if they're unironically going to take some notes from how Palworld did things and incorporate some aspects into the upcoming games. Patents are used to protect innovation, but at a certain point, they can be weaponized. To let a company monopolize an idea which causes it to get worse. I think this story shows market correction. Pocket pair weren't stealing customers. They were
serving them better. And that's the free market doing its work. If you're dissatisfied with one product, you go to other businesses which will serve you better. And that pushes the original company to make better products. There's another company under siege from lawsuits. Though, the stakes are much higher. Steam is a largest video game distributor and it seems like everyone is suing them with claims of them being a monopoly. Yet, customers absolutely love Steam. Why are customers defending a monopoly? Click here to learn the rest of the story. But until next time, I'm Shrey.
