PocketPair Provides Post on Permutations to Palworld based on Pokémon Patents

By Andrew Velzen --

I have previously written extensively on the ongoing legal battle between Nintendo / The Pokémon Company (referred to herein collectively as simply "Nintendo") and PocketPair over PocketPair's popular video game Palworld.[1]  This past week, PocketPair published a blog post addressing some of the recent and upcoming in-game changes.[2]  The PocketPair blog post is worth analyzing vis-a-vis Nintendo's recently filed U.S. patent applications.

Before jumping into the meat of PocketPair's blog post, though, let's check in with the status of Nintendo's developing U.S. patent portfolio related to this case.  As I discussed in one of my previous posts, Nintendo has filed three patent applications that, on their face, are seemingly meant to target Palworld.[3]  To remain consistent with the nomenclature I have used previously, I will continue to refer to these three U.S. patent applications as:  U.S. App. No. 18/652,874 ("US-App-3"), U.S. App. No. 18/652,883 ("US-App-4"), and U.S. Pat. App. No. 18/776,729 ("US-App-5").  As I previously noted, two of these applications (US-App-3 and US-App-5) have both issued as U.S. patents (US-App-3 issued in December 2024 and US-App-5 issued in February 2025).

There has also been additional activity in US-App-4 since my last post.  On December 4, 2024, a final Office Action issued in US-App-4 in which the Examiner rejected the pending claims as obvious under 35 U.S.C. § 103, but indicated one of the dependent claims (claim 22) as allowable.  On March 4, 2025, Nintendo filed a response with the U.S. Patent and Trademark Office (USPTO).  In the response, rather than accepting the allowable subject matter of claim 22, Nintendo responded by:  (i) submitting a further amendment that slightly narrowed the independent claims and (ii) arguing that the prior art did not render the claims obvious.  The patent examiner at the USPTO was persuaded by this response and issued a Notice of Allowance for US-App-4 on April 4, 2025.  Nintendo now has until July 7, 2025 to pay the issue fee, which would result in an issued U.S. Patent.[4]  To summarize, Nintendo now has two patents and will likely soon have a third, as well.

Turning to PocketPair's blog post, PocketPair communicated three important things:  (1) that PocketPair "continue[s] to dispute these [patent infringement] claims and assert the invalidity of the patents in question"; (2) that PocketPair's v0.3.11 patch to Palworld (which "removed the ability to summon Pals by throwing Pal Spheres and instead changed it to a static summon next to the player" and implemented several changes to "other game mechanics") was "indeed a result of the ongoing litigation"; and (3) that PocketPair's upcoming v0.5.5 patch to Palworld (which will change "gliding" such that it is "performed using a glider rather than with Pals") represents "yet another compromise" in order to "prevent further disruptions to the development of Palworld."

While the only currently pending litigation is in Japan (i.e., there is no counterpart patent infringement litigation currently pending in the U.S.), the U.S. patent applications described above are sister applications to the presently asserted Japanese patents and cover similar game mechanics.  Further, to my knowledge, the version of Palworld presently playable in Japan is identical to the version of Palworld playable in the U.S.  Hence, any changes made to Palworld to avoid Japanese patent infringement may also assist with (e.g., be done with the purpose of) avoiding U.S. patent infringement.

On their face, the changes described in item (2) and (3) above from PocketPair's blog post do seem to relate directly to the claims issued (or allowed) in US-App-3, US-App-4, and US-App-5.  For example, the claims of the issued patents corresponding to US-App-3 and US-App-5, respectively, cover (i) "catching a field character" with a "catching item" and then later the "field character" fighting a "fighting character" and (ii) "catching a first virtual character" with a "virtual object" and then later launching the "virtual object" and displaying the "first virtual character" fighting a "second virtual character."[5]  Thus, the changes to Palworld in patch v0.3.11 could certainly assist in avoiding infringement of US-App-3 and US-App-5.  Likewise, the changes to Palworld in patch v0.5.5 could assist in avoiding infringement of US-App-4 (assuming US-App-4 ultimately issue as a patent), since the claims of US-App-4 relate to "causing [a] player character to board an air boarding object."[6]

It is important to note, however, that PocketPair's modification of game mechanics is not an admission of infringement of the U.S. patents.  This is especially true when coupled with PocketPair's statement from the blog post that PocketPair "continue[s] to dispute" the patent infringement claims.  Further, while modification of game mechanics is not an admission of infringement, neither does it insulate PocketPair from liability for any previously committed acts of patent infringement.  Instead, PocketPair may simply be taking steps to mitigate risk moving forward.

For example, should it ultimately be determined that PocketPair committed patent infringement in the U.S., multiple remedies could be applied.[7]

A first type of remedy could include assessing damages against PocketPair in the form of a reasonable royalty.  A reasonable royalty depends on both a "royalty rate" (e.g., the monetary value per unit of infringing product sold that is attributable to the infringing feature) and a "royalty base" (e.g., the number of units of infringing product sold).  The shorter the amount of time that an infringing product is for sale, the less the so-called "royalty base."  For example, any copies of Palworld sold after any infringing feature has been removed from the game could not be included in the "royalty base" (since those copies were not infringing).  Hence, PocketPair could be amending the features to protect against a higher monetary judgment should it ultimately lose a patent infringement case.

A second type of remedy could include an injunction.  PocketPair may be enjoined (i.e., judicially forbidden) from selling products in the future that include infringing features.  Thus, to prevent future software development / game design time being committed to removing infringing features, PocketPair may simply be proactively removing allegedly infringing features now.  Likewise, removal of such features upfront may both:  (i) preemptively adjust player expectations regarding those features and related features being included in-game; and (ii) prevent additional game features that rely on the underlying infringing features from being developed in the interim (i.e., between now and any infringement judgment).

Appropriately thirdly, PocketPair may avoid treble damages in the U.S. by removing the features in question now (i.e., upon becoming aware of the U.S. patents in question).  According to 35 U.S.C. § 284, when there is a finding of patent infringement, "the court may increase the damages up to three times the amount found or assessed."  Treble damages are traditionally rendered as a result of the defendant's willful infringement (e.g., the defendant performing one or more actions that the defendant knows would be covered by a claim of a valid patent of which the defendant was aware).  Due to the presently ongoing legal battles (both in Japan and in the U.S.), PocketPair has almost assuredly been made aware of the two issued U.S. Patents (and allowed US-App-4).  For example, PocketPair may have received one or more threatening letters from Nintendo indicating that Nintendo believes PocketPair to be infringing Nintendo's U.S. patents (e.g., along with copies of the U.S. Patents in question).  This puts PocketPair on notice and, if PocketPair continues to infringe Nintendo's patents thereafter (without any other protections in place, such as a non-infringement opinion), should Nintendo ultimately prevail in a U.S. lawsuit, PocketPair could be on the hook for three times the amount for any infringing acts committed after being put on notice.

As a result, it is very plausible that PocketPair maintains its innocence in terms of patent infringement liability, but for at least the three remedy-related reasons above, has decided to remove the features in question anyway.  This is speculation, but in addition to mitigating risk for the reasons above, PocketPair may also be changing in-game elements based directly on ongoing negotiations with Nintendo.  It is likely that settlement negotiations have at least been floated between the two parties (if not actively ongoing).  Further, part of those settlement negotiations would likely include PocketPair's agreement to remove certain game features from Palworld.  Thus, by removing the features from the game currently (and by issuing a public blog post about it), PocketPair may be negotiating in good faith with Nintendo.

What happens from here on out will likely be based on PocketPair's appetite for a legal battle.  Nintendo is arguably in a relatively strong negotiating position at the moment, as it has already filed suit in Japan and has obtained two (likely soon-to-be three) related patents in the U.S.  Additionally, PocketPair has had immense success over the last year with Palworld.  It may be more of a risk than PocketPair is comfortable with to stake some of that success in a multinational litigation against Nintendo.  In other words, depending on the terms of a negotiated agreement, it may be safer for PocketPair to simply capitulate to Nintendo's requests (e.g., remove certain features from Palworld and pay Nintendo some amount of money), rather than fight the charges of infringement.[8]

Should PocketPair desire to take this fight further, though, there are certainly avenues in the U.S. that could be pursued.  For example, PocketPair could haul Nintendo's U.S. patents back into the USPTO in an Inter Partes Review (IPR) proceeding or a Post Grant Review (PGR) proceeding in an attempt to invalidate the patents, as described in my previous pieces.

Since its outset, this has been an interesting case to follow, with aspects touching on many different areas of intellectual property law.  Given the size of the parties involved (and the relative success of their respective games), I think the entire gaming industry is watching to see how it plays out.  Regardless of the outcome, this legal battle clearly highlights that patents remain an effective tool in the gaming space, even if their use has fallen out of vogue somewhat post-Alice.[9]

[1] See https://www.patentdocs.org/2024/04/palworld-friend-or-foe.html; https://www.gamesindustry.biz/nintendos-patents-were-designed-to-take-on-palworld; https://www.mbhb.com/intelligence/snippets/what-the-pokemon-companys-patent-applications-are-evolving/.

[2] https://www.pocketpair.jp/news/20250508.

[3] https://www.gamesindustry.biz/nintendos-patents-were-designed-to-take-on-palworld; https://www.mbhb.com/intelligence/snippets/what-the-pokemon-companys-patent-applications-are-evolving/.

[4] It is somewhat of an interesting side note that Nintendo has yet to pay the issue fee in US-App-4 (as of May 10, 2025).  Whereas in both US-App-3 and US-App-5, Nintendo paid the issue fee a week or two after getting a Notice of Allowance, in US-App-4, it has been over a month since the Notice of Allowance was issued and Nintendo has yet to pay the fee.

[5] U.S. Pat. Nos. 11,179,111 and 12,220,638.

[6] U.S. Pat. App. Pub. No. 2024/0286040.

[7] See, e.g., 35 U.S.C. § 284.

[8] Worth noting, should PocketPair and Nintendo come to terms on a settlement regarding the Japanese patent infringement suit, such a settlement agreement would most likely be written to avoid any patent litigation in the U.S., as well.  Said differently, if PocketPair agrees to a settlement with Nintendo, PocketPair would presumably be globally insulated against future litigation over related patents.

[9] Alice Corp. v. CLS Bank Int'l, 573 U.S. 208 (2014).

Comments

[Benjamin A Rellinger]

Prosecution in the face of ongoing litigation (and probable settlement negotiations) would definitely be more interesting than the usual, where you're only trying to imagine out maneuvering a hypothetical infringer. That delayed issue fee could be to give themselves extra time to decide on potential continuation claim scope. Of course, there's almost certainly an ethical bar between the two teams on both sides.

I also need to try to get more of my applications assigned to this art unit ... I'm astonished that US-app-4 hasn't had even one 101 rejection. That sort of subject matter would, in my opinion, and immediately catch an unsurpassable 101 rejection in 3600. It really underlines how the "culture" of 101 varies extremely between TCs.

[Andrew Velzen]

@Benjamin A. Rellinger - Completely agree on your comments regarding 101. I'm frankly stunned that all 3 of these have been allowed. Also, one of the reasons to pay the issue fee quickly in US-App-4 would be to try to get it over the finish line before QA has sufficient time to get involved, making it all the more surprising that Nintendo has delayed, in my view.