Patent Rights generally don't include character designs because you can't really copyright design elements, granted Palworld more or less directly ripped Pokemon assets to kitbash the majority of their creatures together.
It's likely for something else.
I was reading into it on Reddit and some legal folks think that the patent violation is most likely this one:
patents.justia.com/patent/20230191255
This patent was filed by Nintendo right before Legends: Arceus came out:
"In a first mode, an aiming direction in a virtual space is determined based on a second operation input, and a player character is caused to launch, in the aiming direction, an item that affects a field character disposed on a field in the virtual space, based on a third operation input. In a second mode, the aiming direction is determined, based on the second operation input, and the player character is caused to launch, in the aiming direction, a fighting character that fights, based on the third operation input."
Overall, I think that patent laws like these are pretty ****ty, but unfortunately that's just how the industry is at large.
