Why Nintendo Hasn't — and Might Not Be Able to — Sue Palworld

Disclaimer: GameGrin is a videogame outlet, and all of the information being shared here is purely speculatory. We are not a professional law firm, and you should — under any means — not use what we say for any possible legal actions. This article is to inform those who wish to know more about the situation, and it is neither legal advice nor a substitute for it.

There's this little game that I've talked about a few times here and there in GameGrin. You may also know it as the title with the highest concurrent players in Steam and reaching new peaks daily, but it's probably more recognisable because we've talked about them. Of course, I mean Palworld. What many have called "Pokémon with Guns", "Pokémon meets Ark", "Pokémon but It's Really About Capitalism", and even "Pokémon for Adults" (not that kind) has taken the world by storm.

After the very sue-happy culture that has plagued Nintendo over the last few years, many have been holding their breath for the industry giant to sue Pocketpair, especially after the Only Up fiasco that occurred just last year. But, nearly a week after its release at the time of writing (Palworld came out on the 19th of January), Nintendo has yet to take any action against the developer and Pokémon's newest competitor. Yet, it's not like they haven't been watching...

A short-lived mod by popular YouTuber ToastedShoes has already been struck by the fierce Nintendo lawyers just a day after the teaser announcement. ToastedShoes is best known for his work with ruining people's childhoods by modding violent games with Disney characters or "ruining" games (his words, not ours) by heavily modding them and releasing videos. After a tweet and a video showing all of the Pals (the collectable monsters in Palworld) being replaced with Pokémon counterparts and the protagonist being replaced by the show's very own Ash Ketchum, it took only a day for the video to be taken down.

This mod was set to be behind a paywall, which is the reason many believe it was taken down. However, this isn't the first instance of Nintendo attacking modders for content — recently, Amethyst-szs, a famous modder known for modding Mario games like Super Mario Odyssey and 2023's beloved Mario Wonder — also received a takedown that blocked her video, "I made 9 NEW BADGES in Mario Wonder". This is also following many takedowns to even YouTubers that covered other games, like Breath of the Wild and PointCrow, who had a lot of modded videos taken down before the release of Tears of the Kingdom with numerous strikes to his YouTube channel, too.

This leads us to Palworld and Pocketpair, which have been untouched by Nintendo so far. It's evident that the famous industry giant still is keeping close tabs on the game due to the immediate takedown of ToastedShoes' mod, but they still haven't taken action against the game itself — why?

Simply put, it has to do with specifics regarding copyright and trademark laws and, most notably, the team's derivative approach. Nintendo and The Pokémon Company have control over the trademarks and copyrights associated with the game — the Pokémon Pikachu is the franchise's trademark icon. Likewise, every Pokémon under the Pokédex is protected under copyright law, meaning that these two companies are the only ones that can recreate and sell anything with the likeness of the 1,017 Pokémon.

However, derivative works are not forbidden under copyright or trademark law as long as the work is distant enough from the source. To this end, Pocketpair uses a derivative approach to the likeness of Nintendo's Pokémon. However, the game's setting (amalgamating genres like survival craft, shooting, automation, and even darker themes like slavery and murder) makes it distant enough that Palworld is a work inspired by Pokémon via derivation. Yet it is not a direct copy because it has darker themes, doesn't follow the traditional RPG formula, and doesn't have badges to acquire.

This is possibly why Palworld heavily markets its game's darker themes despite the fact that — though definitely present — they are not as core and central as they appear to be. The guns and slavery are optional, and you can take a casual, friendly approach to your self-sustaining bases without having to rely on the darker methods showcased. It focuses on the themes that are different from Pokémon and shows why it stands out, making its game a derivative inspiration rather than a copyright infringement.

 Finally, it's worth noting that though Nintendo has been aggressive about their copyright and trademarks, they barely ever step outside of their own IP. Sure, they have taken down videos from content creators and stopped tournaments, but that's within the games that they own — there are dozens of other creature collectors that Nintendo has left untouched, such as Coromon and Cassette Beasts, which means that this doesn't really stand as an anomaly for Palworld, either.