Nintendo and the legal battle over Palworld

Nintendo is currently locked in a legal battle with Pocketpair over the hit game Palworld. The case, which centers on alleged patent infringement, has already led to significant financial losses for Nintendo as it continues to pursue the matter.

The lawsuit

In September 2024, Nintendo and The Pokemon Company jointly filed a lawsuit against Pocketpair, the developer of Palworld. The case, which is currently being heard in Tokyo District Court, accuses Pocketpair of patent infringement related to certain gameplay mechanics, such as mount switching and creature capture.

Nintendo is seeking not only damages, but also injunctive relief to stop the alleged infringement of its patents. These legal actions are especially relevant as Nintendo faces rising legal costs that are also being affected by the Palworld case.

Financial implications

According to Nintendo’s consolidated financial report for fiscal year 2026, the company’s legal costs rose to ¥6.414 billion, or about $41 million. That figure accounts for nearly 96% of the company’s “special losses” during the period.

The report does not specify which lawsuits are driving those costs, but it is clear that the legal fight over Palworld is a major factor. However, the rising expenses may also be tied to other legal disputes, such as the recent settlement with Malikie Innovations over alleged patent infringement related to the Switch.

Pocketpair’s response

Pocketpair has taken a complex legal approach, denying the patent infringement claims while also challenging the validity of the patents themselves. The outcome of the case could affect not only Pocketpair, but also Nintendo, which risks having the patents it has asserted canceled or invalidated.

The proceedings are ongoing, and there are no clear signs that the case is moving closer to a settlement or trial. Lawyers for both sides remain actively involved in the dispute, with recent developments taking place in September 2025.

The legal battle over Palworld highlights not only the challenges Nintendo faces in protecting its intellectual property, but also the broader impact that such disputes can have on the games industry. The outcome of this lawsuit will likely influence future developments across the market.