By Andrew Velzen —
On January 19, 2024, Palworld launched into early access on Xbox and Windows. To say it was an overnight success is an understatement. By only a month in, Palworld had been played by over 25 million players.[1] To put this in perspective, monumental success stories like The Legend of Zelda: Tears of the Kingdom and Hogwarts Legacy (both released in 2023) have sold in the ballpark of 20-25 million copies.[2] It is not surprising that Palworld's meteoric rise has generated a lot of buzz in the industry.
What is Palworld
Palworld is a survival game developed and published by Pocket Pair that is "set in an open world populated with animal-like creatures called 'Pals,' which players can battle and capture to use for base building, traversal, and combat. Players may also assign the 'Pals' to bases where they will automatically complete tasks for the player. Palworld can be played either solo or online with up to 32 players on one server."[3] Most saliently for this discussion, though, is the fact that the "Pals" bear a not-so-subtle resemblance to Pokémon (e.g., in name and/or likeness).[4] As just one of countless examples, compare the following image of the Pal Grizzbolt (left) with the Pokémon Electabuzz (right):[5]
In fact, given the visual overlap, gamers have started colloquially referring to Palworld as "Pokémon with Guns."
Accusations of Infringement
Given the striking resemblance, it isn't surprising that many in the industry have wondered whether any of Game Freak Inc. / The Pokémon Company / Nintendo Co., Ltd. (collectively referred to herein as the "Pokémon Owners") would initiate action for copyright infringement against Pocket Pair, especially given Nintendo's notoriously litigious reputation.[6],[7] Interestingly, Pocket Pair has a history of making games that appear, at least facially, to be clones of other games.[8] As far as I'm aware, none of the Pokémon Owners have yet to take any legal action against Palworld. That isn't to say that the Pokémon Owners aren't seriously considering such action, though. In fact, regarding Palworld, The Pokémon Company issued the following statement:[9]
We have received many inquiries regarding another company's game released in January 2024. We have not granted any permission for the use of Pokémon intellectual property or assets in that game. We intend to investigate and take appropriate measures to address any acts that infringe on intellectual property rights related to the Pokémon. We will continue to cherish and nurture each and every Pokémon and its world, and work to bring the world together through Pokémon in the future.
I have heard 3 main allegations levied regarding the creation of the Pals vis-a-vis Pokémon. Namely, that Pocket Pair: (a) generally copied many concepts of Pokémon in a creatively bankrupt fashion, (b) obtained three-dimensional (3D) models of Pokémon and only made slight modifications to those models before pushing them out the door, and/or (c) trained a generative artificial intelligence (AI) using 3D models of Pokémon and then had that AI produce 3D models for Pals.[10] To my knowledge, there has been no publicly accessible discovery thus far, so we can't, with absolute confidence, ascertain which of these three allegations (if any) are true. Still, I plan to discuss the potential merits of a copyright infringement suit in the United States against Pocket Pair under each of these hypothetical copying regimes.[11]
What Would the Complaint Allege?
A successful copyright infringement suit requires that plaintiff has a registered copyright on an underlying copyrightable work (or an exclusive license thereto), that defendant infringed on an exclusive right conferred by the copyright (without a license), and that no defenses apply (e.g., there is no fair use defense). The primary questions in a hypothetical Pokémon Owners v. Pocket Pair case are: (i) which aspects of Pokémon are covered by the Pokémon Owners' copyrights (i.e., which aspects are copyrightable) and (ii) would Pocket Pair have a reasonable fair use defense. I will analyze both of these questions for each of the three sets of potential facts.
First – What if Pocket Pair simply copied some or most of the general concepts that make Pokémon successful?
As a first consideration, does the fact that Palworld is a game that involves catching monsters and using them in combat mean that Pocket Pair has infringed a copyright? I think most people would inherently understand that this fact, taken alone, would be insufficient to constitute copyright infringement, but let's briefly discuss why.
As a general rule, "ideas" aren't copyrightable (rather, only expressions are). This is, unsurprisingly, typically referred to as the "idea-expression dichotomy," and is codified in 17 U.S.C. § 102(b).[12] One tenant of the idea-expression dichotomy is that certain concepts are so common / ubiquitous to a given medium or genre that such concepts are not copyrightable (these concepts are sometimes referred to as scènes-à-faire). In the video game world, this could include things like user interface menus or combat or character creation, but can extend even further to the entire underlying genre of a game (e.g., the general concept of a "fighting game" is not protectable by copyright). I won't get into it here, but for a good illustration of where the line is between what is a scène-à-faire and what is protectable by copyright, contrasting Atari v. Amusement World with Tetris v. Xio is instructive.[13]
Here, the idea of monsters fighting with one another or against a player is probably not something that could be covered by a copyright. For example, the concept of monsters that take forms that are subtly or directly inspired by various animals, people, or forces of nature (as many Pokémon are), is something that has been present in the culture of Japan for thousands of years in the form of the Yōkai.[14] As a specific example in the context of Pokémon / Palworld, the general concept of a fox (kitsune) with some magical powers is well-known, so it cannot be the subject of a copyright. In fact, both games include multiple fox creatures (one of the Pals even being named "kitsun"):[15]
Given all this, it is unsurprising that, historically, the Pokémon Owners have not pursued litigation against games that are far more similar to Pokémon (at least in terms of gameplay) than Palworld is (e.g., Digimon World, Temtem, etc.).[16]
Second – What if Pocket Pair copied underlying Pokémon models?
So, while the general concepts employed in Pokémon aren't likely protectable by copyrights, what about the 3D character models, themselves? While it is only conjecture at this point whether actual Pokémon models were copied in the production of Palworld, there are some in the industry that have promulgated what they believe to be strong evidence of such copying.[17] This narrative has unsurprisingly been opposed by Pocket Pair.[18] Regardless, for the sake of argument, let's assume that Pocket Pair did in fact have access to the underlying 3D Pokémon models and only made minor tweaks (e.g., slight modifications to limb-shape, face-shape, hair-shape, or hair color; remeshing; reskinning; modifying relative proportions; etc.) to arrive at the Palworld models. Would this be copyright infringement?
3D models are protectable by copyright, so long as the 3D model isn't merely an exact one-to-one digital rendering of something that exists in the physical world (i.e., so long as some originality / creativity was present in the development of the model).[19] Further, to my knowledge, no Pokémon are exact replicas of any naturally occurring creature (i.e., while there may be cow Pokémon, a 3D scan of an actual bovine was not merely replicated to generate Miltank).[20] Given this, the 3D models of Pokémon could be subject to copyright protection. Thus, if the 3D models of Pokémon were directly imported into Palworld, the Pokémon Owners would have a strong case for infringement. In fact, this isn't so far off from something that almost happened (not as a result of the actions of Pocket Pair, but as a result of the actions of a Palworld modder). The modder uploaded a YouTube video and a tweet that previewed a mod that imported Pokémon directly into Palworld.[21] Nintendo, unsurprisingly, swiftly issued a Digital Millennium Copyright Act (DMCA) strike against both the video and the tweet. Even further, in an abundance of caution, the popular modding site Nexus Mods preemptively banned the uploading of any Palworld mods related to Pokémon.[22]
So, we know that it would not be okay for Pocket Pair to directly import / use Pokémon models in Palworld, but, assuming Pocket Pair had lawful access to the Pokémon models (e.g., could reverse engineer them in a lawful way), would it be okay if Pocket Pair modified the models and put them into Palworld. This is where the typical lawyer answer of "it depends" comes into play.
One of the rights that a copyright holder has (e.g., that the Pokémon Owners have here in relation to the 3D Pokémon models) is the right to prepare derivative works.[23] The U.S. Copyright Office lists the right to prepare derivative works as including "[a] revision of a website" and "[a] new version of an existing computer program."[24] As such, the Pokémon Owners own the right to prepare a "new version" of the original 3D Pokémon models.
This right only protects the Pokémon Owners to the extent that a resulting 3D model is derivative of the original work, though. In some cases, the resulting work is so transformative that the producer of the resulting work has a fair use defense. Hence, the question here becomes whether the modifications to the underlying Pokémon models is sufficiently transformative (and, therefore, subject to the fair use defense).
In order to determine what is and is not transformative, we can look to the 4 fair use factors: (i) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (ii) the nature of the copyrighted work; (iii) the amount and substantiality of the portion used in relation to the copyright work as a whole; and (iv) the effect of the use upon the potential market for or value of the copyrighted work.
The above factors are obviously debatable and fact-specific. However, if the Palworld models are, in fact, only minor modifications to the Pokémon models, I believe at least 3 of the 4 factors would weigh against a finding of fair use. Under these assumed facts, the following considerations are likely relevant to the factors recited above:
i. The Palworld models are being used commercially, in bad faith (e.g., without permission from the Pokémon Owners and without public admission), and for essentially the same purpose as the Pokémon models (weighing against a finding of fair use);
ii. The creation of the original Pokémon models was a highly creative endeavor (weighing against a finding of fair use);
iii. Only a few dozen or so of the plethora of Pokémon models have been replicated in Palworld (weighing in favor of a finding of fair use); and
iv. Palworld and Pokémon are both video games competing in the same market for gamers to purchase their games and, even if they have yet to do so, the Pokémon Owners could make a similar game to Palworld (hence, it was a market that the Pokémon Owners would've been able to exploit) (weighing against a finding of fair use).
One final note regarding fair use. One of the stronger ways to demonstrate fair use is to show that a work is a parody. One could clearly argue that "Pokémon with Guns" is a parody of Pokémon. Palworld includes many aspects that are not only opposite of Pokémon, but clearly meant to poke fun at Pokémon. For example, rather than petting a Pokémon, you can butcher a Pal or rather than an animal/trainer relationship between players and Pokémon, there can be a master/slave relationship between players and Pals.[25] Thus, there is at least a colorable argument that Palworld exists to ridicule some of the underlying tenants of Pokémon.[26]
Still, in my view, the primary purpose of Palworld is not to make fun of Pokémon, but to be a commercial success in its own right by exploiting the exact same market that the Pokémon Owners could, themselves, exploit. Hence, in my view, it would be difficult for Pocket Pair to argue that Palworld is a parody (especially in light of all the fair use factors considered above).
Third – What if they used the models to train an AI, though?
Under the third set of potential facts, Pocket Pair is assumed to have taken the Pokémon models, trained a generative AI (genAI) using the Pokémon models, and then used the genAI to produce the Pal models (e.g., by employing a generative adversarial network (GAN)). This third set of circumstances is perhaps the most interesting (as the first set of circumstances likely does not constitute copyright infringement and the second set of circumstances likely does constitute copyright infringement).
The foundational question here is clearly "is it copyright infringement to use copyrighted material to train a generative AI?" Fortunately, to answer this question, we can look to a growing number of cases concerning this exact issue. For instance, many developers of large language models (LLMs) are being sued for using copyrighted material to train their LLMs.[27] Unfortunately, though, none of these cases have yet been decided, so we aren't sure how U.S. courts feel about this (which is exacerbated by the fact that none of the cases have percolated above the district court level either, and this issue will likely be an issue that appeals courts, or even the U.S. Supreme Court, will need to weigh-in on).
Still, we can compare / contrast the Palworld saga with one of the AI cases; let's use the one with perhaps the highest notoriety — New York Times v. Microsoft and OpenAI. In that case, the New York Times has alleged that OpenAI / Microsoft's genAIs "rely on large-language models that were built by copying and using millions of The Times's copyrighted news articles, in-depth investigations, opinion pieces, reviews, how-to guides, and more" and that "the outputs of the defendants' GenAI models compete with and closely mimic the inputs used to train them, copying Times works for that purpose is not fair use."[28] Whether such use does, in fact, constitute fair use (contrary to the New York Times's assertion) is a judgment call. From one point of view, the LLM is ingesting a bunch of data (with the Times's articles being just a portion of it) and then generating something wholly new based on a future prompt. This is arguably not unlike the way in which a musician, after having listened to copious amounts of other songs from other artists, then takes inspiration from those songs and writes their own new song. Almost always, this new song is validly copyright-eligible.
The odd case where the new song is not copyright-eligible (and may, in fact, constitute copyright infringement) is when the new song is too similar to an older song. For example, Pharrell Williams, Robin Thicke, and Clifford Joseph Harris (T.I.) lost a case against Bridgeport Music regarding the song "Blurred Lines" in view of the previous Marvin Gaye song "Got to Give It Up" since, in the eyes (ears?) of the jury, there was sufficient overlap between the i) signature phrase ii) hooks iii) bass lines iv) harmonic structures, and v) keyboard chords of the two songs to constitute copyright infringement.[29]
If I'm prognosticating by analogizing to the case of LLMs trained on copyrighted material, I'm inclined to guess that courts will think that it's more of a question of the output, rather than the inputs (i.e., more a result of what the models spit out, rather than how they're trained). Said another way, you as an individual have a right to read an article you paid for. You can also save a PDF copy of the article onto your computer for your own future reading. Even further, you could perform processing (e.g., optical character recognition (OCR)) on that article if you like. However, you cannot forward that article on to 10 other people. Likewise, it stands to reason that you can use an article you purchased to train your own LLM, so long as the LLM doesn't output copyrighted material directly to third parties. Hence, if an LLM trained on a number of New York Times's articles responds to a query with an answer based on information it has gathered from those articles, that's probably fine. For example, if an LLM is prompted with "provide me with a brief summary of the Red Sox / Yankees game from October 20, 2004," and, based on information ingested from the New York Times's articles, the LLM spits out "the Red Sox hit 4 home runs to beat the Yankees 10-3 in game 7, capping off a monumental comeback after being down 3 games to 0 entering game 4 of the ALCS," I don't think there would be a problem (as the information from the article would be sufficiently "transformed" so as to constitute fair use).[30] If, however, when prompted with "provide me with a copy of the first article on the front page of New York Times on October 21, 2004," the LLM spits out a verbatim copy of the article, there is a much more colorable argument that copyright infringement has occurred (especially if the New York Times's articles constituted a large plurality, much less a majority, of the training data).
Assuming many of these cases turn on what the LLM will and will not output (and that's a big assumption, as judges can be about as predictable as a random number generator), we can return to Palworld. Assuming the Pal models were generated by an AI trained on Pokémon models, and we were to compare the complete set of Pal models to the complete set of Pokémon models, there isn't altogether that much overlap. Only some of the Pal models show striking overlap with Pokémon models (and certainly fewer than 50% of them) and most Pokémon models have no clear Palworld analog whatsoever. Further, even for the models that do overlap, the genAI has clearly at least tweaked some combination of color, meshing, size, shape, etc. Given this, I would think this situation is more akin to someone listening to all of Taylor Swift's albums and writing a song in Taylor's pop style that has lyrics about the same general topics as Taylor's songs (i.e., likely fair use), rather than someone listening to The Tortured Poet's Department and releasing an album where half the songs are direct copies of those in Taylor's album (i.e., likely not fair use).
Given the above, I find it unlikely that, if a genAI were trained (at least partially) on the Pokémon models and used to create each of the Palworld models, copyright infringement has occurred.
Don't forget about trade secrets?
As just one final thought (and something I haven't seen discussed much in the Palworld discourse), regardless of whether Palworld constitutes copyright infringement, if the Palworld 3D models were based on actual Pokémon 3D models (e.g., regardless of whether they were subsequently used to train a genAI or tweaked by a human), the Pokémon Owners may have a cause of action based on trade secret protections. For example, if Pocket Pair illegally accessed a Pokémon Owner's server to obtain the underlying 3D model and/or if a former or current employee of the Pokémon Owners improperly provided the 3D model to Pocket Pair, such actions could constitute a misappropriation of trade secrets. Hence, Pocket Pair profiting from them would be improper (and Pocket Pair could be liable for damages).[31] That is, of course, assuming there was no reasonable way to reverse engineer the Pokémon 3D models without improper means (e.g., without violating Pokémon terms of service). Given the above, in addition to or instead of a copyright infringement action, the Pokémon Owners could succeed in a trade secrets suit against Palworld if Pocket Pair stole or otherwise improperly obtained the Pokémon models.
Conclusion
It's obviously debatable whether the Pokemon Owners would succeed in a suit against Pocket Pair over Palworld. It would come down to the facts regarding whether and how the models for the Pals were generated (and, if a lack of direct evidence were present, what a jury might think of circumstantial evidence of copying). It becomes even more convoluted if each of the three factual situations posited above occurred in conjunction with one another (rather than only one of the three occurring alone). Further, given the success of Palworld, I doubt that Pocket Pair would have the stomach for full on litigation against the Pokémon Owners (i.e., would settle before anything progressed very far).
This is 100% conjecture, but if I were a psychic Pokémon casting Future Sight, my guess would be that the Pokémon Owners will let sleeping dogs lie and decline to pursue this in any way. The only exception, in my view, would be if the Pokémon Owners have some smoking gun regarding illicit access to their 3D models. In such a case, I would assume the Pokémon Owners would send a cease and desist to Pocket Pair threatening litigation and that Pocket Pair would respond by removing (or heavily modifying the character models of) the Pals that were created as a direct result of the improperly obtained Pokémon models.
As Professor Oak says, this "tale of grand adventure is about to unfold."[32]
[1] https://twitter.com/Palworld_EN/status/1760682105171062876
[2] https://www.forbes.com/sites/paultassi/2024/02/06/hogwarts-legacy-barely-holds-off-tears-of-the-kingdom-for-most-sales-of-2023/?sh=46beea2f128a
[3] https://en.wikipedia.org/wiki/Palworld
[4] On that note, if you're looking for some late '90s nostalgia and some music to read by, might I recommend – https://www.youtube.com/watch?v=rg6CiPI6h2g
[5] https://gamerant.com/palworld-electric-element-pals-pokemon-counterparts-similarity-explained-grizzbolt-electabuzz/. Plenty of other articles have been written enumerating the Pals that resemble Pokémon counterparts, as well. See also, https://www.ign.com/articles/palworld-vs-pokmon-comparison-just-how-similar-are-the-designs, https://clutchpoints.com/all-the-pokemon-look-alikes-in-palworld, https://www.sportskeeda.com/mmo/5-palworld-pal-designs-similar-popular-pokemon, https://gamerant.com/palworld-pokemon-controversy-stolen-designs-every-pal-similarity-explained/.
[6] https://www.ign.com/articles/as-palworld-blows-up-could-nintendo-successfully-sue-the-controversial-pokemon-with-guns-game
[7] https://www.thegamer.com/a-snapshot-of-nintendos-convoluted-legal-history/
[8] In 2020, Pocket Pair released a survival game called Craftopia that had a very similar aesthetic to Nintendo's The Legend of Zelda: The Breath of the Wild (https://www.gameinformer.com/2024/02/22/what-is-palworld-the-new-pokemon-with-guns-survival-game-everyones-playing). Interestingly, Pocket Pair's own webpage for Craftopia includes the Pokemon trademarked slogan of "Gotta Catch 'Em All!" – https://www.pocketpair.jp/craftopia.
[9] https://www.ign.com/articles/the-pokemon-company-makes-an-official-statement-on-palworld-we-intend-to-investigate
[10] https://youtu.be/b5W1OFnnj4w?si=DwxJRNFo_N8l7Q4h&t=237
[11] If you would like to see an EU / UK lawyer's brief thoughts on the matter, see https://www.rockpapershotgun.com/does-palworld-break-pokemons-copyright-we-asked-a-lawyer
[12] https://www.law.cornell.edu/uscode/text/17/102
[13] Atari, Inc. v. Amusement World, Inc., 547 F. Supp. 222 (D. Md. 1981); Tetris Holding, LLC v. Xio Interactive, Inc., 863 F. Supp. 2d 394 (D.N.J. 2012); see also Applying Copyright Law to Videogames: Litigation Strategies for Lawyers, John Quagliariello, Harvard Journal of Sports & Entertainment Law, Vol. 10
[14] https://mluce.ro/articles/the-yokai-roots-of-pokemon/
[15] https://bulbapedia.bulbagarden.net/wiki/Vulpix_(Pok%C3%A9mon); https://bulbapedia.bulbagarden.net/wiki/Ninetales_(Pok%C3%A9mon); https://palworld.fandom.com/wiki/Foxparks; https://palworld.fandom.com/wiki/Foxcicle; https://palworld.fandom.com/wiki/Kitsun
[16] https://en.wikipedia.org/wiki/Digimon_World; https://en.wikipedia.org/wiki/Temtem
[17] https://www.videogameschronicle.com/news/palworld-pokemon-plagiarism-accusations-pile-up-as-ceo-responds/
[18] https://www.pcgamer.com/palworld-accused-of-copying-pokemon-models-developer-pushes-back-says-artists-are-being-slandered/
[19] See, e.g., Meshwerks v. Toyota Motor Sales U.S.A., Inc., 528 F.3d 1258 (10th Circuit, 2008)
[20] https://bulbapedia.bulbagarden.net/wiki/Miltank_(Pok%C3%A9mon)
[21] https://www.polygon.com/24047136/palworld-pokemon-mod-release-toastedshoes
[22] https://www.destructoid.com/nexus-mods-bans-pokemon-based-content-for-palworld/
[23] 17 U.S.C. § 106(2)
[24] https://www.copyright.gov/circs/circ14.pdf
[25] https://www.rockpapershotgun.com/palworlds-skin-deep-pokemon-parody-is-part-of-a-bigger-horror-story
[26] For an interesting rebuttal to the rockpapershotgun parody article reference above, see https://www.themarysue.com/palworld-why-a-pokemon-parody-may-be-considered-fair-use-but-satire-isnt/
[27] See, e.g., Leovy v. Google (N.D. Cal.); Nazemian v. NVIDIA Corporation (N.D. Cal.); Tremblay v. OpenAI (N.D. Cal.); Silverman v. OpenAI (N.D. Cal.); Chabon v. OpenAI (N.D. Cal.); New York Times v. Microsoft and OpenAI (S.D.N.Y.)
[28] https://www.thefashionlaw.com/from-chatgpt-to-deepfake-creating-apps-a-running-list-of-key-ai-lawsuits/
[29] Williams v. Gaye, 895 F.3d 1106 (9th Cir. 2018)
[30] This situation can be analogized to Authors Guild, Inc. v. Google, Inc. (2nd Cir. 2015), in which Google digitized copyrighted works and displayed snippets of them in response to a search, and the court found that such a use was transformative enough to constitute a fair use.
[31] 18 U.S.C. § 1836; 18 U.S.C. § 1839(5)
[32] https://gamerant.com/pokemon-professor-oak-quotes-ranked/
Patent Docs 