When Palworld was released, many people thought it was disturbingly similar to Pokémon. Although there are definitely several similarities, it also has a lot of unique features, but in the end, Nintendo decided to sue the developer Pocketpair.
But it wasn't about how the game's Pals looked, like a lot of people thought it would be. The lawsuit was more about the game mechanics, and Nintendo just had a setback there. Gamesfray (thanks, Windows Central) reports that Japan's patent office rejected one of Nintendo's claims, which is expected to strengthen Pocketpair's defence.
The patent in question was registered in 2023 (but applied for two years earlier), and the patent office points out that other games had similar game mechanics even before that, including Studio Wildcard's already classic ARK: Survival Evolved and Monster Hunter 4.
Nintendo basically has two choices: either give up this part of the lawsuit or try to modify its claims to convince the patent office. The latter is probably the most likely outcome, but regardless, the lawsuit is far from over, so expect to hear more about this story.