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The Palworld Pokemon mod is back, but without the Pokemon
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this post was submitted on 31 Jan 2024
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That's not the issue, or what that means here. "Legally distinct" in this context would mean that the product isn't infringing on the IP, copyright, or trademark of a similar product. "Yellow rat" is fine, "Pikachu" is not.
If someone ripped a verse or a chorus from a song, and uploaded it to Spotify, you don't think that Universal could contact Spotify to take it down or block it?
Mods are free and community-driven. This situation is closer to someone using the chorus to a song in their own soundcloud track, which in my opinion should be completely fine
IIRC, the mod wasn't free. They were making money off of it using Patreon.
It's this and the fact that Japan has no Fair Use of Copyright as well