Context: Nintendo is suing Palworld maker Pocketpair over three patents in Japan, and the latter is defending itself with multiple non-infringement arguments and numerous invalidity contentions (April 18, 2025 games fray article). In parallel, Nintendo is apparently preparing U.S. patent litigation by trying to obtain patents it might assert there (April 3, 2025 games fray article).
What’s new: On Thursday, Pocketpair announced an update to Palworld that comes with various changes, particularly one concerning the feature of having one’s character ride on flying non-player characters named Pals, and this is all about ensuring that Nintendo’s patent assertions won’t do any serious damage to the game (May 8, 2025 X post by Pocketpair).
Direct impact: Just like in late 2024, Pocketpair has introduced a workaround during the period between a patent examiner‘s decision to grant a patent and the publication of the actual patent by the United States Patent and Trademark Office. As a result, it looks like Nintendo has no strong basis anymore to bring a U.S. patent infringement lawsuit against Pocketpair, which can in the meantime try to invalidate those patents and potentially bring back the removed functionality after the patents have been revoked. Further down the road, those changes to gameplay will also ensure that any hypothetical Japanese patent injunction is going to be useless.
Wider ramifications: Nintendo has a loyal fan base, but its ability to grow beyond its core audience and sell its consoles and games to other customers may be adversely affected by the negative sentiment that its bullying of a small (albeit extraordinarily successful) game maker spurs. It will reflect even more unfavorably on Nintendo if its anti-Palworld patents are ultimately held invalid and Pocketpair puts back the functionality after Nintendo was inconveniencing gamers for years (and for no good reason).
Here’s Pocketpair’s X post about the workaround update:
The fact that Nintendo, through its behavior, necessitates such product changes is viewed negatively by other industry players. For example Mark Kern, who was the team lead for the original World of Warcraft and worked on other Blizzard games as a producer, noted on X that “[t]ons of games have flying mounts, this is ridiculous.”
What Pocketpair changed is that a player character needs a glider to fly, and it can’t just ride on a dragon-like flying Pal.
Mr. Kern is indisputably right: the invalidity contentions we saw in Pocketpair’s defenses in Japan involve a long list of games with that feature. Also a reader has shared a link with us that requires further analysis (we will follow up with another article if and when we are convinced that it is indeed a “smoking gun”) but could show that Nintendo got the idea from Pocketpair rather than the other way round.
Workaround strategies
Workarounds have two use cases:
- to avoid litigation in the first place (which is what Pocketpair is doing here with respect to the U.S., though it’s too late for Japan, where Nintendo sued last year), and
- to minimize (or at least mitigate) the impact of an injunction (which Nintendo is seeking in Japan) and to avoid futher liability for damages.
Let’s look at the broader landscape in the tech industry:
If Apple (with its vast resources and reputation for vigorous patent defense) were in Pocketpair’s shoes, it would not make changes at this stage. Apple would prepare a product update, typically during the course of litigation, but it would defend itself against any infringement action and cross the workaround bridge when it inevitably gets there.
That approach has four advantages:
- There is a chance of fending off the infringement lawsuit, in which case no workaround version will ever have to be published.
- Even if the patentee prevails, one knows how the court interprets the patent (that interpretation is called claim construction), and with that additional knowledge of how broad or narrow the patent is in the court’s view, it may be possible to do a workaround that is less inconvenient to customers.
- The period during which customers are inconvenienced is shorter than if one makes proactive changes.
- A company can exue confidence in is not infringing any valid patents held by the rival in question.
But this approach also has three disadvantages: litigation costs (easily $10 million to defend a case like Nintendo’s in the U.S., with only a slim chance of being able to recover any of that). liability for damages (even if only for a limited period) and negative publicity from being characterized as an infringer.
Pocketpair’s X post talks about the workarounds being a means of avoiding further-reaching disruption, so this is the most cautious approach. No details are provided concerning what types of disruption might occur, but the worst-case scenario would be an injunction resulting in the temporary removal of Palworld from distribution channels like Steam. Also, by running away from Nintendo’s patents like a fleeing Pokémon, Pocketpair’s developers can focus on their work now instead of having to deal with U.S. patent litigation by Nintendo.
Sometimes workarounds go unnoticed, but that is a rare scenario
Some workarounds keep clear of infringement of a patent without consumers even noticing a change. More than a decade ago, Apple won a U.S. import ban against Samsung over four patents. Samsung worked around it in ways that didn’t affect the users of its Galaxy phones. They basically provided the same functionality just in a different way.
Most workarounds, however, do entail that something changes in a noticeable way. In Palworld, the biggest problem, relatively speaking, with the workaround mechanisms for summoning a pal or for flying is that gamers were used to different game mechanics. Gamers never like it when mechanics change, unless there is a huge benefit, such as a new shortcut (and even then there are always soe who’d rather not get the extra functionality but keep the interface they’re familiar with).
Nintendo is not going to solve its actual “problem” this way: the number of people who will say that Pals (the non-player characters in Palworld) bear a generic resemblance to Pokémons is going to be the same before and after the workarounds. The workarounds are not about character design.
Logistical implications of workarounds
The first question about a workaround is how much it costs to develop it. The effort for that was presumably limited in Palworld’s case, though it is never trivial to change gameplay elements at the core of a product of very significant internal complexity. And programmers always prefers to work on improvements rather than on (perceived or actual) degradations of quality.
The next question is how easy it is to roll out the workaround. That is very simple here: it’s just a quick and simple software update. By contrast, if someone sued a hardware maker like Nintendo over patents that can only be worked around by changing something physical, the costs would be greater and there could be significant delays involved before the workaround version actually ships.
The worst-case logistical scenario is when an injunction issues over standard-essential patents (SEPs). A patent covering a method that is absolutely needed to connect with a WiFi router has the potential to cut off a product’s network connection unless all routers are modified to be compatible with a workaround, which is not really an option. That is why the world’s major jurisdictions have special rules in place governing the pursuit and grant of injunctive relief over SEPs. It’s not an issue in the Pokémon-Palworld dispute.
Potentially pre-emptive in the U.S., still helpful in Japan
In the U.S., Nintendo will not be able to argue that two patents it specifically obtained for use against Pocketpair were actually infringed by Palworld the moment the patents formally issued. That leaves Nintendo with two (mutually non-exclusive) choices:
- They can sue for damages (in this case, only based on a theory that they are entitled to a certain amount of reasonable royalties) for a period after publication of the underlying patent application but prior to grant (i.e., until the rollout of a Palworld update that came with a workaround). This is not even formally called damages, but merely “provisional rights.” There is not a lot of money to be made that way. Also, in addition to all other defenses (no infringement, patent invalid etc.), Pocketpair could argue that
- the patent claims ultimately granted by the USPTO differ significantly from the published patent application:
- actual notice of the patent application would be another requirement that Nintendo might not be able to satisfy; and
- any infringement before formal publication won’t count, but those litigation-driven Nintendo patent applications were actually filed after Palworld launches. All in all, Nintendo may not have any provisional rights against Pocketpair in the U.S., and even if it did, it would be nothing for the Palworld maker to lose sleep.
- Nintendo can assert some of the patents that were not optimized for litigation with Pocketpair, trying to convince a court to interpret those patents broadly enough that Palworld would be deemed to have infringed. A damages award could be larger than in the scenario discussed before (and based on more theories than just a reasonable royalty level). But Nintendo has three problems. First, it wouldn’t have tried to obtain some patents specifically for litigation against Palworld if it never needed them. Second, if Nintendo must advocate an extremely broad claim construction in order to have an infringement case, a patent is also at heightened risk of invalidation (that’s the flipside of broad patents). Third, those workarounds put an end to any hypothetical infringement.
One can never rule out anything, but it looks like Nintendo stands nothing to gain now from U.S. patent litigation against Pocketpair.
If Nintendo prevailed on one or more patents in Japan, an injunction would probably be useless because of the workarounds. A patent injunction does not declare an entire product illegal: it only prohibits making a product that infringes specific patents by using particular techniques.
Pocketpair’s defenses in Japan look very solid, but if Nintendo won something, it might also get an injunction based on a finding of past infringement, even if that one has already stopped. It just wouldn’t make a difference in the marketplace then.
All in all, Pocketpair has defused the situation, and Nintendo now sees that the scope of its patents has its limitations.
There was a recent deadline for Nintendo to reply to Pocketpair’s defenses, and we haven’t seen that reply yet. Nintendo will get to reply to that reply later this month. We’ll try to find out more as soon as possible, but there are sometimes major delays before pleadings filed in Japanese patent lawsuits become publicly accessible in practical terms.