While the designs were clearly inspired by Pokemon, I don’t think Nintendo has any leg to stand on in this case. The connection is flimsy at best., but I’m not a lawyer so I dunno, maybe there’s some legal loophole that Nintendo is banking on.
If this case goes in Nintendo’s favour, it could open the door for other lawsuits like Stardew Valley could get sued for infringing on Nintendo’s Harvest Moon IP, for example. I know that’s ludicrous but who knows, the law goes in unexpected directions sometimes.
Regardless of who owns the IP, it will open the flood gates of any company suing another for even just taking inspiration from one of their IPs.