Context: Since September 2024, Nintendo has been suing Palworld maker Pocketpair over three Japanese patents. It has lately been quiet around that case, but there are no signs of a settlement. Most recently, the news that surfaced related to rejections of Nintendo patent applications in Japan (October 29, 2025 games fray article) and (as a result of re-examination) the United States (April 1, 2026 games fray article).
What’s new: Today, Nintendo released the report for its Fiscal Year 2026 (April 1, 2025 to March 31, 2026) (link to Nintendo website). In various ways, it was a pretty good year for Nintendo, but what stands out from the profi & loss statement (PDF) is a line item called “Loss on litigation”, listing 6.414 billion yen (approximately US$40M) versus zero for the previous period:
Nintendo’s annual report doesn’t disaggregate the figure for litigation losses. One can only speculate what this number has to do with patent litigation and, in particularly, the Palword dispute that appears to be going nowhere.
As part of our work on ip fray, regularly read certain companies’ financial reports and comment on what they reveal about patent licensing and litigation. We track lawsuits and settlements, and during that fiscal year, Nintendo settled a litigation over former BlackBerry patents (December 2, 2025 ip fray article). It could be that part of the $40M amount is attributable to the costs of settling that dispute. Presumably, the patent holder, a company named Malikie, was seeking back-royalties from Nintendo for allegedly using the patents-in-suit in years past.
Other than that, only Nintendo’s litigation with Pocketpair serves as an explanation. That one started in September 2024, but Nintendo did not list “Loss on litigation” for the previous fiscal year (April 1, 2024 to March 31, 2025). There must have been some costs in the build-up to the September 2024 filing and in the six months following it. Nintendo did not have a line item for litigation-related losses at the time:
It is possible that Nintendo did not consider its litigation-related costs worth reporting in certain prior periods, but a critical mass may have been reached that necessitates disclosing the number. It is conceivable that Pocketpair’s defenses (April 18, 2025 games fray article) required Nintendo to spend a lot of money on lawyers in order to develop a strategy for how to respond to them.
Nintendo may actually generate some income from patent litigation against a third-party game controller maker (December 16, 2025 games fray article), after 15 years of suing. But they are not there yet, and the amount is only a fraction of Nintendo’s FY 2026 litigation-relatd losses.
Maybe Nintendo should be less litigious and (even) more profitable.