Nintendo’s Patent War Against Palworld Collapses as U.S. Rejects Key Claim in ‘397’ Lawsuit

The video game industry’s most scrutinized legal battle just took a dramatic turn as the U.S. Patent and Trademark Office (USPTO) delivered a crushing blow to Nintendo’s aggressive patent strategy against Pocketpair’s breakout hit *Palworld*. In a 'non-final Office action' issued on [insert date if available], the USPTO rejected all claims in Nintendo’s disputed U.S. Patent No. 12,403,397—a sweeping legal weapon that would have allowed the Japanese gaming giant to sue competitors for creating games featuring character summoning mechanics. The decision, which arrives amid escalating scrutiny of Nintendo’s legal tactics, signals a potential collapse of the company’s high-stakes lawsuit against Pocketpair, the indie studio behind *Palworld*, a game that has drawn comparisons to *Pokémon* but operates in a vastly different genre. While Nintendo retains the option to appeal within a two-month window, industry analysts warn that the rejection of '397' could unravel the broader foundation of its patent litigation strategy, leaving the company exposed to counterclaims and reputational damage.

• The USPTO has rejected all claims in Nintendo’s controversial ‘397’ patent, a sweeping legal tool that could have restricted character summoning mechanics across the gaming industry.
• The decision follows years of Nintendo’s aggressive patent filings and lawsuits targeting Pocketpair’s *Palworld*, a game that has sold over 20 million copies and sparked debates over creative borrowing in gaming.
• Critics argue Nintendo’s legal strategy—including last-minute patent filings and dubious claims of prior art—reveals desperation to suppress competition rather than protect innovation.
• The USPTO’s ‘non-final’ ruling gives Nintendo two months to appeal, but legal experts suggest the patent’s rejection could embolden other defendants to challenge Nintendo’s broader patent portfolio.

How Nintendo’s ‘397’ Patent Became a Legal Landmine for the Gaming Industry

When Nintendo’s U.S. Patent No. 12,403,397 was granted in July 2023, it sent shockwaves through the gaming community—not for its innovation, but for its sheer breadth. The patent, titled 'Systems and methods for controlling characters in video games,' described a mechanism so broad that it could theoretically cover any game allowing players to summon or control secondary characters in combat scenarios. This included mechanics as disparate as *Pokémon*’s trainer-and-Pokémon dynamic, *Monster Hunter*’s palico companions, and even *ARK: Survival Evolved*’s tamable creatures.

The Origins of a Patent Built on Questionable Grounds

The origins of Patent ‘397’ trace back to Nintendo’s long-standing efforts to protect its intellectual property, particularly its signature *Pokémon* franchise, which has spawned one of the highest-grossing media franchises in history. Nintendo has aggressively defended its trademarks and patents, filing lawsuits against modders, fan games, and even rival studios it accuses of copying its mechanics. However, critics argue that ‘397’ represents an overreach—one that could stifle creativity across an industry already grappling with consolidation and monopolistic practices.

The patent examiner who initially approved ‘397’ in 2023, John A. Squires—a Trump-appointed official at the USPTO—later acknowledged the error after reviewing prior art submissions from Konami, Bandai Namco, and even Nintendo itself. These companies had filed patents years earlier that described similar character control mechanics, rendering ‘397’ redundant at best and invalid at worst. The USPTO’s subsequent ‘non-final Office action’—a procedural step that allows patent holders to respond before a final decision—has now placed Nintendo on the defensive, forcing the company to either abandon its claims or mount a costly legal appeal.

Palworld and the Escalation of Nintendo’s Legal Campaign

Nintendo’s legal battle with Pocketpair over *Palworld* didn’t begin with the ‘397’ patent. It started in January 2024, when *Palworld*—a survival-crafting game featuring creatures that resemble *Pokémon* but behave more like tamable AI companions—exploded in popularity, selling over 7 million copies in its first six weeks. Pocketpair, a small indie studio, had openly embraced the comparisons, even releasing a trailer that parodied *Pokémon* and its mechanics. Nintendo, however, saw red flags. While *Palworld*’s gameplay diverged significantly from *Pokémon*, its aesthetic and creature designs drew inevitable comparisons, leading Nintendo to accuse Pocketpair of capitalizing on its brand.

The Failed ‘Passing Off’ Claim and Nintendo’s Desperate Pivot to Patents

Nintendo’s initial legal strategy relied on a ‘passing off’ claim—that *Palworld* was misleading consumers into believing it was an official *Pokémon* product. However, this argument quickly collapsed. *Palworld*’s developer, Pocketpair, had never claimed to be affiliated with Nintendo or the *Pokémon* franchise. Moreover, the game’s survival-crafting genre and open-ended gameplay bore little resemblance to *Pokémon*’s turn-based battles. With no grounds for a trademark infringement lawsuit, Nintendo pivoted to patent litigation, a move that industry observers called a Hail Mary pass.

In a lawsuit filed in September 2024, Nintendo alleged that *Palworld* infringed on multiple patents, including ‘397.’ But the company’s legal strategy soon unraveled. Court documents revealed that Nintendo was seeking just $65,000 in damages—a figure that critics mocked as negligible compared to *Palworld*’s commercial success. Worse, the patents Nintendo cited were either filed or amended *after* *Palworld*’s release, a tactic that raised eyebrows among patent law experts. The Japanese Patent Office, in a separate ruling in October 2024, called out Nintendo’s approach as ‘dubious,’ noting that games like *Monster Hunter 4* (2013) and *ARK: Survival Evolved* (2017) featured mechanics Nintendo was now trying to claim as its own.

Why the USPTO’s Rejection of ‘397’ Matters for the Gaming Industry

The gaming industry has long operated in a legal gray area where inspiration, homage, and outright copying often blur. Nintendo’s patent strategy, however, threatens to tilt the balance toward litigation over creativity. If ‘397’ had survived, it could have given Nintendo—or any company holding similar patents—a legal cudgel to wield against competitors, indie developers, and even major studios. The USPTO’s rejection of the patent sends a signal that the agency is willing to scrutinize Nintendo’s broader patent portfolio, which includes over 10,000 active patents and trademarks related to its franchises.

The Chilling Effect on Indie Developers and Innovation

For indie developers, the threat of patent lawsuits looms large. Studios operating on shoestring budgets often lack the resources to fight legal battles, forcing them to either rework their games or abandon projects altogether. *Palworld*’s success—despite its legal troubles—has been a rare bright spot in an industry dominated by AAA giants. However, the precedent set by Nintendo’s patent strategy could embolden other companies to file similarly broad patents, creating a minefield for smaller studios.

Legal experts warn that Nintendo’s approach sets a dangerous precedent. ‘Patents are meant to protect true innovation, not stifle competition or punish creative borrowing,’ said Sarah Jeong, a technology and intellectual property lawyer. ‘When companies use patents as a cudgel rather than a shield, it chills innovation and harms the ecosystem that made their own success possible.’

What Happens Next? Nintendo’s Options and the Broader Fallout

Nintendo now faces a critical decision: appeal the USPTO’s rejection of ‘397’ or walk away from the lawsuit entirely. If the company chooses to appeal, it could drag the case out for years, a strategy that might pressure Pocketpair into a settlement. However, given the Japanese Patent Office’s prior ruling and the USPTO’s skepticism, legal analysts suggest that an appeal is a long shot. A loss on appeal could embolden other defendants to challenge Nintendo’s patents, potentially leading to a cascade of legal challenges against its broader portfolio.

The Public and Industry Response: A Rare Unified Criticism

Nintendo’s legal campaign against *Palworld* has drawn widespread criticism from gamers, developers, and industry observers alike. Social media erupted in support of Pocketpair, with many accusing Nintendo of bullying an indie studio that had done nothing wrong. Even *Pokémon* fans, typically loyal to Nintendo, expressed dismay at the company’s tactics, arguing that *Palworld*’s homage to *Pokémon* was more celebratory than exploitative. The backlash forced Nintendo to release a rare statement in February 2025, clarifying that it was not targeting *Palworld* specifically but rather ‘protecting its intellectual property.’ However, the statement did little to quell the outrage.

‘Nintendo’s patent strategy isn’t about protecting innovation—it’s about maintaining control. When a company with the resources of Nintendo starts wielding patents like this, it sends a message to smaller studios: innovate at your own risk.’ —Mark Serrels, gaming journalist and critic

The Broader Implications for Patent Law in Gaming

The *Palworld* case is just one example of a growing trend in the gaming industry, where companies are increasingly turning to patents and trademarks to suppress competition. In recent years, Nintendo has filed lawsuits against modders, fan games, and even rival studios, using legal tactics that blur the line between protection and extortion. The USPTO’s rejection of ‘397’ could signal a shift in how the agency views such cases, particularly when patents are filed retroactively or with questionable novelty.

Key Takeaways: What This Means for Gamers and Developers

• The USPTO’s rejection of Nintendo’s ‘397’ patent is a major setback for the company’s legal strategy against *Palworld* and could embolden other defendants to challenge its broader patent portfolio.
• Nintendo’s pivot from trademark infringement to patent litigation highlights the company’s willingness to use aggressive legal tactics, even when those tactics appear frivolous or retaliatory.
• The case underscores the risks indie developers face when their games draw comparisons to established franchises, raising questions about how the industry balances homage and infringement.
• Legal experts warn that Nintendo’s approach could chill innovation by creating a legal environment where companies prioritize litigation over creativity.
• If Nintendo fails to appeal—or loses on appeal—it could set a precedent that limits the use of patents as tools for suppressing competition in the gaming industry.

Frequently Asked Questions About Nintendo’s Patent Battle with Palworld