Nintendo Reports Huge Litigation Losses as Palworld Lawsuit Continues

While Nintendo’s Palworld lawsuit still shows no end in sight, the Japanese gaming giant has incurred tens of millions of dollars’ worth of litigation losses during its newly concluded fiscal year. However, some indicators suggest those expenses may not stem from the Palworld case, which Nintendo is still actively pursuing.

A September 2024 lawsuit jointly filed by Nintendo and The Pokemon Company accused Pocketpair of infringing their patents with Palworld. The case, brought before the Tokyo District Court, centered on Palworld’s mount-switching and creature-capture mechanics, with the plaintiffs seeking damages and injunctive relief.

Nintendo Reports Over $40 Million in Litigation Losses for FY 2026

As the Palworld patent lawsuit approaches its second anniversary, Nintendo’s litigation expenses have risen sharply, according to the company’s consolidated financial report for fiscal year 2026. Published on May 8, the report lists ¥6.414 billion, or just under $41 million, in litigation expenses incurred during the 12-month period ending March 2026. Nintendo did not break down the figure by case or provide any other information pointing to the cause(s) of the reported expenses. Litigation accounts for nearly 96% of the company’s “extraordinary losses” for the reported period, with disposal of non-current assets—which can mean anything from office equipment to buildings—cited for the remaining $1.7 million worth of losses.

Looking more broadly, the fact that Nintendo is still actively pursuing the Palworld lawsuit suggests its case against Pocketpair may not be factored into the newly reported litigation losses, or at least is unlikely to be the main contributor to the roughly $41 million figure. Because this line item is labeled as a litigation loss rather than routine legal spending, it is more likely to reflect an adverse settlement, licensing agreement, or a similar resolution rather than an ongoing cost of a lawsuit that Nintendo itself chose to prosecute.

Nintendo’s FY 2026 Litigation Losses Possibly Stem from Recent Settlement Over Former BlackBerry Patents

One plausible explanation is Nintendo’s recently settled patent dispute with Malikie Innovations and Key Patent Innovations, which centered on the Switch family of devices allegedly infringing on former BlackBerry patents. The case was filed in September 2024 and appears to have moved toward a confidential settlement during Nintendo’s most recently concluded fiscal year, with related patent-review proceedings later terminated. Because Nintendo was defending against infringement claims in that dispute, and because the settlement terms were not publicly disclosed, the timing and posture of the BlackBerry patent case make it a stronger candidate for Nintendo’s newly reported litigation expenses than its still-pending Palworld case or recent enforcement actions in which Nintendo was the plaintiff.

As for the company’s most high-profile litigation in recent memory, Nintendo and Pocketpair’s attorneys were still sparring over the Palworld patent case as recently as September 2025. Pocketpair has mounted a dual-defense strategy, arguing that it did not infringe the plaintiffs’ patents while also challenging their validity. In the event of a loss, Nintendo could risk having the patents it sued over invalidated or their definitions narrowed by the presiding court. There is still no indication as of May 2026 whether the case is closer to settlement or trial.

Sources: Games Fray