There is no legal issue, Nintendo is suing as a formality to protect their existing copyrights. They'll be ruled against and shrug their shoulders and pay Pocket Pair's legal fees because that is a much better business decision than risking losing their copyright to their existing creatures.

If they don't aggressively protect their copyright, the JCO might just rule that they have become generic and common use like how Bayer lost the trademarked name 'Asprin' in the U.S. when it was considered common use and Bayer did not pursue it aggressively.

But that doesn't make good youtube poop or memes so you probably think this is some kind of hotly contested hullabaloo because of where you are getting your info from.