The patent infringement case of "Phantom Palu" that has lasted for nearly two years has not yet come to an end, and an astonishing "litigation loss" figure in Nintendo's latest financial report has triggered widespread speculation in the industry. According to Nintendo’s consolidated financial report for fiscal year 2026 (ending March 2026) released on May 8, the company recorded litigation losses of 6.414 billion yen (approximately US$41 million) in the past 12 months. This figure accounted for more than 96% of the company's total "special losses" for the fiscal year, with the remaining approximately US$1.7 million coming from the disposal of non-current assets (such as office equipment or buildings, etc.).
In September 2024, Nintendo and the Pokémon Company jointly filed a lawsuit in the Tokyo District Court, accusing Pocketpair, the developer of "Pokémon Pal", of infringing on a number of its patents, mainly involving the riding switching and creature capture mechanisms in the game. The plaintiff requested a cessation of infringement and compensation for losses. As of May 2026, the case has not yet been concluded, and in September 2025, lawyers from both parties are still having a fierce battle over the validity of the patent and whether it is infringed.
However, it is worth noting that the "litigation losses" item in the financial report usually refers to unfavorable settlements, licensing agreement compensation or failed judgments, rather than the regular legal expenses incurred by the company as a plaintiff in the lawsuit. Therefore, some analysts believe that the $41 million is probably not mainly due to Nintendo's initiative to sue "Phantom Parlu", but for other reasons.
The industry generally believes that this huge litigation loss is more likely to stem from a patent dispute between Nintendo and Malikie Innovations and Key Patent Innovations. The case was filed in September 2024, accusing the Nintendo Switch series of devices of infringing on relevant patents originally belonging to BlackBerry. During the fiscal year that just ended, the case appeared to have been settled confidentially, and the related patent review process was subsequently terminated.
In this case, Nintendo is in the position of the defendant, and the terms of the settlement have not been made public. Regardless of the time point or the nature of the case, this BlackBerry patent settlement case is more consistent with the direction of "litigation losses" in the financial report than the ongoing "Phantom Parlu" case.
Returning to the high-profile "Phantom Parlu" case, Pocketpair adopted a dual defense strategy: on the one hand, it claimed that it had not infringed, and on the other hand, it questioned the validity of the patent held by Nintendo. If Nintendo loses the lawsuit, it may face the risk that the relevant patents will be declared invalid or the scope of protection will be limited.
As of May 2026, it is still unclear whether the case will eventually move towards settlement or trial. Nintendo did not further explain the specific composition of the litigation losses in its financial report, and the outside world can only piece together the truth from limited information.