The "update" is from a month ago. Pocketpair shared the patents they are accused of infringing and the payments Nintendo wants.

The patents are for "throwing an object in 3D space to capture a target" (throwing a pokeball) and "moving characters to a virtual field when an event is triggered" (entering a battle) the payment requested is 10 million yen or 64,000 USD. A paltry sum for a billion dollar company suing over a game that made tens of millions.

The patents were awarded to Nintendo after Palword had already released a trailer for their game showing gameplay. Pocketpair also released an earlier game called Craftopia which is Palworld but the pals are just straight up animals. It has the same systems Palworld does but didn't sell very well.

A newer update is that Palworld has since released a patch that modified how their capture and summon system works, likely in an attempt to make Nintendo happy.

Palworld Update v0.3.11 Notes:

Player: Changed the behaviour of summoning player-owned Pals so that they are always summoned near the player

UI: The reticle will now only be displayed when aiming

Edit: there are actually 3 patents. The third one is for the player character being able to ride on another character.