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There are a variety of factors to consider outside of "is it calling itself Animal Crossing"
While entire genres cannot in fact be copyrighted (or haven't, at least, to my knowledge) The types of things a judge would look for in this situation are as follows:
1) How easy is it to distinguish the two products?
If the two products cannot be easily distinguished, this may constitute infringement. Bare in mind that while WE might be able to look at two screenshots and come to the conclusion that this is in fact not Animal Crossing, a judge or even a general consumer with limited to no video game knowledge might not be able to say the same.
2) Is the product intentionally misleading, unintentionally misleading, or attempting to present itself as a clearly distinguished alternative?
Two out of three of these constitute infringement.
While general concepts in video games are rarely considered "copyrighted", specific concepts are in fact a little murkier.
Anyone can make a life sim game.
Anyone can make a came with anthropomorphic animals.
Anyone can make a game that utilizes a RTC to sync game time and real time.
Add all of these together and it's generally understood that you are talking about Animal Crossing.
Therefore an argument could be made that they are intending to mislead, or unintentionally misleading, given the size of the brand in question.
HOWEVER- Given the lack of the Animal Crossing brand being available to PC markets, an argument could be made that it is strictly an alternative in a market where it doesn't even compete with said brand. This of course gets even murkier if Team 17 decides to release on their game on the switch eShop, which they usually do with most of their releases.
After those two things have been considered, it would be a blow by blow basis of "is X copying Y" directly, in that they would comb through character models, environmental models, textures, sound design, game design, level design, etc. to see just how much X is in fact taking from Y. General stylings in this nature aren't copyrighted, so unless Team 17 directly copied code, models, textures, basically ANYTHING except the general concept, they would be infringing. This is highly unlikely, but not unknown to happen.
ALL THAT BEING SAID- I am in no way an expert, and I've been proven wrong before, but in my opinion, they are not infringing. They are clearly labeled as their own product, everything looks original if not a bit inspired by AC, but inspired is not grounds for infringement.
This will probably scratch the itch of those who don't have a Nintendo system but want to play Animal Crossing.
I might get this as well, if it gets over 90% positive reviews (n>1000).
But personally I think this game went a bit too far, by having the NPC:s to be animals as in the Animal Crossing game. Couldn't it be something else instead? There are more similarities than differences.
I don't mind the animal aesthetic, but - like you say - maybe it'd work more if it more readily did it's own thing.
To be quite honest, I love the premise - but hate the design of the models. Animal Crossing is very charming with it's design, but here, the long limbs and so on - comes across as more unnatural then a charming 'cartoonish' feeling.
Animal Crossing (and Hokko Life) aren't the only games that have animals as NPCs though. Garden Paws, Castaway Paradise, Cozy Grove, and probably a bunch of others that I'm not aware of, also have animal NPCs. Even My Time at Portia has Papa Bear, who is obviously a bear.
I'm personally super excited about the game and love the AC-vibes. Though I've been binging YouTube Let's Plays from the beta, and I'm wondering if this isn't slightly closer to My Life at Portia than to AC in terms of the gameplay, since not having a time gate changes the atmosphere quite some.
I'm also very impressed with the custom furniture creation feature, which AC doesn't have. People make everything from beds to bikes to custom bridges. When I saw that feature in the trailer I thought "huh, neat", but seeing people use it in the beta made me realize what an underestimated and fantastic feature that really is. It's not just customizing existing furniture, but creating brand new furniture from scratch!
Hoo, but they try; Ever heard of Warner Bros. securing a patent on a GAME MECHANIC?... - What's stopping Nintendo from securing anything "Animal Crossing" with their power?... Especially with their track record of weirdness, like hammering down on YouTube-videos with Nintendo content or limiting/discontinuing game-releases.
I'm not saying that the law will allow them to lock down anything similar to "Animal Crossing", but they might find a way. - Especially since, again, Nintendo is rather petty about anything that IS or is LIKE their stuff.
They could do something other then animals, but the way internet works today that would delete a lot of hype from a specific crowd which seems to be more, and more popular. So many people just love animal people.
Animals have a better ability to be, by default, cute and nonthreatening, no matter what the age or background of the character is. If Tom Nook was human, I would hate his guts...
Look at TemTem, a Pokemon "clone". I bought it when it came out, and it's still getting support and updates to this day, and was never sued.
Personally, I'm glad that there are teams willing to service a customer base with genre inspirations that Nintendo stubbornly won't.