Context: A Japanese newcomer named Pocket Pair has just released a game named Palworld that has become an overnight success with many millions of concurrent gamers playing the title. It’s wildly popular on Valve’s Steam service as well as on Microsoft’s Xbox console. Similarities between certain Palworld characters and some Pokémon characters have given rise to internet discussions.
What’s new: The Pokémon Company (a joint venture between Nintendo and two other companies (Wikipedia article)) has issued a public statement (corporate website) on “inquiries regarding other companies’ games” that, without naming Palworld, undoubtedly relates to it and declares an intent “to investigate and take appropriate measures to address any acts that infringe on intellectual property rights related to the Pokémon.”
Direct impact: The announcement doesn’t have the potential to slow down, much less disrupt, Palworld’s meteoric success. It also doesn’t make it a given that intellectual property infringement litigation will indeed be brought. It could be a warning shot or meant to assuage parts of the fan base. But it appears that the Pokémon Company is now in the process of evaluating potential infringement theories, presumably in multiple jurisdictions.
Wider ramifications: The games industry is generally not considered very litigious, particularly not relative to its size. The Pokémon Company’s largest shareholder, Nintendo, is often on the receiving end of patent assertions and is known to vigorously protect its franchises.Even if an action were to be brought over Palworld, it would be unlikely to change the overall climate in the industry at large.
In the first part, this article discusses what can be reasonably inferred from the Pokémon Company’s statement. The second part talks at an abstract level about what an enforcement effort might look like and what would determine its outcome. The third part discusses whether Pocket Pair might sue Nintendo now in response to, and over, that statement.
Should there be actual litigation, it will be covered by games fray, which will explain he basics of intellectual property litigation in simpler terms than its more specialized sibling site ip fray that talks about IP litigation on an almost daily basis.
Interpreting the Pokémon Company’s statement: they aren’t sure, but wish to fire a warning shot
First off, it is not unheard of, but rather uncommon, for a company to issue a public statement that essentially just says that it is contemplating bringing an IP infringement action against a particular product, but unsure at this point of whether it has a meritorious case. Other scenarios are more common:
- Companies often reiterate that they reserve and protect their rights. Those “all rights reserved” type of statements, which are often made in speeches and interviews, don’t single out any accused product, but are just generally meant to serve as a warning for an entire industry.
- If a company has an issue with a particular rival product, it normally doesn’t say anything in public before it sues. Enforcement action then has the desirable side effect of warning the rest of the industry. That was particularly the case when Apple started suing Samsung over its iPhone and iPad design rights. Sometimes that message is reinforced by issuing a public statement on the occasion of a particular filing that threatens litigation against unspecified other infringers unless they stop to infringe or (if available, which is not the case here) take a license.
- It can be useful to put an alleged infringer on notice through private notice prior to filing suit. U.S. lawyers often recommend it with a view to making an infringement willful, or making it easier to prove that it is. Such notices, however, are useful only if they allege infringements with specificity.
There is a circumstance here that may explain why the Pokémon Company departed from those “best practices”: they got many inquiries from the media and from fans, and that number must have been unusually large given the Palworld phenomenon’s impact. That’s why the title of the statement is “Inquiries Regarding Other Companies’ Games” and the first sentence says this (which incontrovertibly means Palworld without saying so, as companies don’t like to strengthen a rival’s brand recognition (i.e., free advertising) through their own public statements):
“We have received many inquiries regarding another company’s game released in January 2024.”
That sentence uniquely describes Palworld. There simply is no other rival game that was released in January 2024 and known to have sparked “many inquiries.”
A company is under no obligation to comment with specificity on such inquiries. It can simply decline to say anything (which some will then also interpret to say something). It can also just point to general, long-standing policies. But if a company wants to go beyond that and tell the world that it is contemplating taking action against a particular product, then it must choose the right wording and timing with a view to such (potential) litigation.
It’s possible that the Pokémon Company is more concerned now about Palworld potentially having opened the floodgates, encouraging other game makers to come up with other titles that bear whatever degree of resemblance to Pokémon.
The statement then tells the fan base and the market that this is not a licensed product (i.e., it’s not like someone having a license to make Pokémon coffee cups):
“We have not granted any permission for the use of Pokémon intellectual property or assets in that game.”
Grammatically, that sentence does not allege that there is an actual use of Pokémon IP or assets in that game. The Walt Disney Company hasn’t granted the Palworld maker such a license either (in all likelihood), the difference just being that no one raised the question of whether Palworld infringes any Disney IP.
So instead of alleging an infringement, the Pokémon Company merely acknowledges that others think there is (or may be) one. That’s fair. The statement continues:
“We intend to investigate and take appropriate measures to address any acts that infringe on intellectual property rights related to the Pokémon.”
The word “any” says that if and when they find something, they’re certain to act, but it’s also possible they won’t identify anything against which to take action. That sentence is in the Palworld context, but “any” means it’s a warning for the entire industry.
The last statement is not a legal one, but directed to the Pokémon fan base:
“We will continue to cherish and nurture each and every Pokémon and its world, and work to bring the world together through Pokémon in the future.”
This sounds like the Pokémon Company’s response to many Pokémon fans’ belief that Palworld has some nice gameplay elements that they’d have liked to see the Pokémon Company itself implement. To be fair, the Pokémon franchise expanded in many directions, and Pokémon GO is a great example of a genre (location-based augmented reality gaming) where they were (through a joint venture with Google) at the forefront.
It’s obvious that Palworld demonstrates a missed opportunity for the Pokémon Company. That, in and of itself, doesn’t constitute an infringement.
All in all, the Pokémon Company’s statement is an interesting blend of being afraid of Palworld’s success (and what others might do now) undermining its crown jewel (the Pokémon franchise) and coming across as assertive. It may also be a cultural thing, though it’s slightly reminiscent of Steve Jobs’ crusade against Android, which he described to his biographer as “a stolen product.”
Potential assertion strategies: different possibilities but no obvious route
While Pocket Pair is a small company, they have been able to form partnerships with large players for this project, and chances are that some kind of IP clearance took place before launch.
The Pokémon Company is now presumably looking (if it hasn’t already given up, which is also possible) into whether it owns any rights in any important jurisdiction (i.e., a market large enough worth bringing a lawsuit) that it could assert. So it’s a question of what types of IP and in what places to (potentially) assert. For instance, in the U.S. a litigant may hope that a jury could be driven by something not feeling right, but a judge would decide what claims can be taken to trial and what arguments can be made, plus whatever the jury decides could be overruled (though the hurdle is reasonably high for that).
IP professionals make the distinction between “hard” and “soft” IP. Hard IP usually just means patents. It doesn’t mean that “soft” IP (copyrights, trademarks, trade secrets) is a blunt sword. And beyond “soft IP” there’s also an adjacent field of law: unfair competition law.
There’s no such thing as a right on super-abstract gameplay concepts such as game rules. In fact, even a book that describes the rules of a game is protected only with respect to the creative expression of the book itself, not the underlying rules.
Technical patents (utility patents) are unlikely to be relevant here. The Pokémon Company and especially Nintendo own a number of such patents, such as on taking the player’s sleep cycle into account when the game makes certain decisions. It’s possible that they could try to assert them. What makes it unlikely is that patentable technology in that area is typically found at the level of chipsets, operating systems and game engines. But even if Palworld infringed on a patent on, for instance, some method of displaying animated graphics, it would be unrelated to the creative aspects that the Pokémon Company cares about. It would be an incidental infringement. Also, it could almost certainly be worked around by simply changing the program code in a way that wouldn’t diminish the gameplay experience.
Design patents and similar design rights in other jurisdictions: Design patents are a U.S.-specific thing, though EU design rights work in somewhat similar ways. Originally those rights were meant to protect physical products, but they are increasingly also used in a digital context. Design patents and similar rights cover a combination of design elements, and there is no infringement if any one of those so-called limitations (i.e., necessary elements) is missing. It appears very unlikely that the Pokémon Company would assert design patents against Palworld. There’s no indication of the Pokémon Company owning a U.S. design patent that could be used against Palworld. If that was the case, however, the Pokémon Company could theoretically be entitled to a disgorgement of the entirety of the profits made through an infringement.
Copyright on images: On the internet one can see juxtapositions of Palworld and Pokémon characters. Wireframe models can be copyrightable creative expression, but only if they are expressive, which mere proportions between a head and the rest of the body are not. Copyright is not as narrow as to protect only 1:1 copying, but not much broader either. Also, even if a minor copyright infringement was identified, Pocket Pair would get away with a fair use defense (in non-U.S. jurisdictions, there are similar but differently-named concepts) as it’s transformative. In the event of a massive copyright infringement, Pocket Pair would normally not be able to defend itself on the basis of fair use given that Nintendo would have a reasonable argument concerning competitive harm.
Trademarks and trademark-like rights such as trade dress: Trademarks are meant o make sure that buyers are not confused about the origin of a product. For instance, if you buy a tire for your car, you shouldn’t believe it’s a Bridgestone tire if it actually isn’t, as you might otherwise buy it instead of a real Bridgestone that you’re looking for, or if you were dissatisfied with it, it would harm Bridgestone’s brand reputation. There are word marks and graphical trademarks. As for word marks, Palworld isn’t called Pokémon, nor does it appear to contain any other word that could be called “confusingly similar” to a Pokemon trademark. And the graphical style is probably distinct enough as well.
Last resort – unfair competition law: If the Pokémon Company couldn’t find any IPR in a strict sense to assert, it would probably check as one last option the possibility of a claim under unfair competition law. Such laws exist all over the world (in the United States, only at the state level). The theory under UCL would be that Pocket Pairs engages in an unfair “exploitation” of the brand recognition of Pokémon. In that context, there would be scope, in theory, for a more abstract perspective that would take into account design and gameplay elements, and even proportions of body parts. But it would probably be the first case in history where someone would successfully sue a rival game maker, over an undoubtedly innovative game, and prevail on “exploitation” grounds.
It would obviously be easier to discuss any actual infringement claims than just discussing the theoretical possibilities in the abstract. Should the Pokémon Company bring a complaint, games fray will be sure to analyze it.
Could Pocket Pair now sue the Pokémon Company?
It’s doubtful that they would do that, and they’re probably too busy enjoying–and building on–their enormous success.
But if they wanted to clear their reputation aggressively, and considering that there are many jurisdictions on this planet where sometimes one can find an opportunity to bring a lawsuit in a certain place over something that might not work elsewhere, a boomerang isn’t entirely inconceivable.
They could ask a court of law to hold that they don’t infringe any IPR belonging to the Pokémon Company. The problem is that so far the Pokémon Company hasn’t talked about any particular IPRs, and that’s why in many jurisdictions it would be hard to bring such a case with the prerequisite degree of specificity to have an actual controversy. Still, there could be jurisdictions where the mere insinuation by the Pokémon Company that Pocket Pair may be infringing any of its rights might be enough to bring a declaratory-judgment lawsuit. In that case, the Pokémon Company would have to “put up or shut up.” They’d have to either say “no, no, you don’t infringe” or they’d have to make a showing. It would be like “speak now or forever hold your peace.”
Another hypothetical attack vector would be for Pocket Pair to seek injunctive relief against the Pokémon Company, arguing that the public statement discussed herein adversely affects Pocket Pair’s (and its Palworld’s) reputation. There are laws against libel, and here, again, unfair competition rules could come into play. But it appears that the Pokémon Company carefully crafted its statement so as to make it at least very difficult for Pocket Pair to succeed on those grounds.
The most likely course of action on Pocket Pair’s part is to wait and see if and when the Pokémon Company takes any real action as opposed to putting out quasi-insinuations. And in that case, Pocket Pair could bring counterclaims.
Should the Pokémon Company never follow up with an actual lawsuit, or should it do so but the lawsuit fails, then the statement about inquiries about Palworld will have to be viewed in a very, very negative light. At the same time, it is understandable that a single-franchise company gets worried in a situation like this and engages in saber-rattling.