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Reminds me of that time when the warner brothers were told that they dont own the word "brothers" 

 

Isn't "persona" some term of psychology mumbo jumbo anyways? 

It is but its also referenceing a direct series with the same name so if someone in the gameing community hears the word persona they dont think of psychological first they think of the games. That matters more in copyright cases the technical definitions.

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Thats bonkers, so now not a single game can use the word, i would understand if they used "shin megami tensei" on the title too, "persona" is just a sub line of that series, like "digital devil saga" or "nocturne"

When a game becomes a hit and its referred to a single name such as "persona" and the legal lay man only calls it that then it can become a protected property in only a certain field. You could still use the word "persona" in a games name but it must different itself completely from the main seires thats know by that name. This game saddly wouldnt most likely meet that burden.  A good point to emphasize this point is even though the official name of persona 2 is  "Shin Magame Tensi Persona 2 Innocent Sin" you would only reffer to it as "Persona 2" or "Persona Innocent Sin" in a legal sense all 3 names can be claimed one easily due to being the official name and the other two because of the image you think of leads directly to the first.