I'm not arguing that (and know about the Palworld case off course). What I argue is, that most companies big or small want to avoid going to court, and fight (possibly years) over patents. Or avoid getting sued if they use patented mechanics. Just like with the situation of emulators, it doesn't matter if the developers are right or wrong, they fear going to court against Nintendo.

Now in case of Palword I have to say, bravo. Wish more had the courage (and money!) to fight Nintendo. It would make gaming better, because I hate game mechanics being patented.

Nintendo famously sued Palworld over throwing balls to capture monsters and using them in battle. They had a lot of claims thrown out but the suit is still ongoing apparently.

Exactly why this is still a problem. There are patents of game mechanics that prevented other devs to implement them, because they do not want to go to court or fear they could lose in a court. The Nemesis system is such an example often brought up in discussions like these. Or the ability to catch a Pokemon with the Pokeball in the way Nintendo does, and riding/flying with a monster are also patented. And on that note, I think Nintendo lost the case with the riding or with the catch mechanic, I don't remember details.

Game mechanics being patented is enforceable as far as I know, but only if the patent is in that country and is valid (validity can change even after it was granted, but that is not common). The point is, if valid or not, most companies just stop using those game mechanics out of fear. And that still holding back innovation.