As part of its ongoing copyright infringement lawsuit against Palworld studio Pocketpair, Nintendo has argued that mods cannot be viewed as "prior art" like games and cannot be counted as such in the legal battle.

The details:

Earlier this year, Nintendo and The Pokémon Company accused Pocketpair of infringing on several patents detailing the capturing and battling of monsters using systems similar to those found in Pokémon. The Palworld developer went on to defend itself by presenting several instances in other popular titles where similar mechanics appear, and among these examples was a Dark Souls 3 mod titled “Pocket Souls,” which allows enemies to be captured and used in battle.
As reported by Game Fray, Nintendo has responded to Pocketpair's defense by claiming that mods cannot be viewed in the same way as actual games since they require a base game to function. It argues that as a result, mods should not be subject to patent infringement in the same way that Palworld is, despite the fact that, as Game Fray's Florian Mueller points out, developers are often inspired by community-made mods.
PC Gamer has noted that courts in Japan typically side with defendants that are capable of providing instances of prior art, such as Pocketpair with “Pocket Souls.” Mueller added that Nintendo’s attempt to dismiss mods in this situation is an “extreme” stance to take and that "courts usually reject attempts to narrow the pool for prior art references in unreasonable ways."
Despite the ongoing lawsuit, Pocketpair is still carrying on with the development of Palworld, which is set to exit early access next year. Earlier this week, it shared that new content updates will be rare as it works on the 1.0 release, which will see many technical improvements and bug fixes.

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Nintendo argues mods can't be counted as games as Palworld dev highlights Dark Souls 3 mod in lawsuit defense