I always thought Palworld was going to get in hot waters since it's very transparently tip-toeing the line of copyright theft. Look at any of their models and tell me they came up with the idea, if their designs ain't been stolen from Pokemon directly, it's been stolen from elsewhere.
Some folks were snitching the game to nintendo (and that's uncool, are you guys the kids who were telling the prof there were homeworks for today if they forgot?) and because of it, Nintendo had to put up a statement, maybe on their website or maybe on their presskit.
It seemed like Pocketpair was in the clear since no news dropped about the investigation, however over a year later Nintendo filed a lawsuit against them over patent infringement over the game's capture mechanics being similar to Pokemon catching. To the surprise of nobody, the pal spheres are exactly like pokeballs.
This was their new statement on their website
What that tells me is that Palworld doesn't violate copyright laws like many have claimed. They own the rights to the characters and models and they're derivative enough, but the game mechanics are too similar to what's in pokemon.
Considering it's not the first time they are doing something this sussy I feel like it was only a matter of time before Nintendo or Game Freak would do something about it, but they needed a legal reason to go after Palworld.
So ultimately it's none of the designs that would get them in trouble. It would be the "capture" game mechanics I reckon.
There's also the other end of the debate: "But the pokemon company stole designs, the hypocrites!" and I know what they mean, but it ain't that simple. Some of the older Pokemon were taken from Dragon quest like Geodude looks the same as the mud monster from dragon question and more recent entries have very obvious inspirations like Spectrier being Luna from mlp, Zarude having Joker's mask or both Nickit and Thievul look like Foxy from fnaf, but the problem is it's a few specific creatures while Palworld has its entire cast based on Pokemon or other intellectual properties.
Although Palworld plagiarized Pokemon designs, it is by no means illegal or infinging copyright laws and I think that if it was, it'd open the doors for more lawsuits. Many games share the same models and designs either accidentally because the games use royalty free assets or thanks to inspiration and imitation (what Palworld clearly is).
An example that's not Palworld would be Indigo Park which has the grossest hand model I've ever seen and I was interested in the game solely because I'm a furry. As it turns out you can find the same hand model in Panicore.