I think there is potential that this was intended.

PalWorld was SO on the nose modeled after pokemon plus Breath of the Wild that it couldn't be anything but a stab at Nintendo. And yet, it seems that (I'm not a lawyer) they skirted around ever actually infringing on copyrights. If you want to build a zoo full of creatures, there are only so many ways you can combine things without making a fire dog or ice dragon, and then comparisons can be made. PalWorld has many creatures that I don't recognize as being similar to existing pokemon. Given that Nintendo has not gone after PalWorld for copyright infringement, I'd say that means they don't have a case.

Patents are another angle, and I'm far from a patent lawyer. Have you ever read one? They are full of jargon and what seem to be nonsense words, especially a software patent for a video game. I found an article that describes how Nintendo can use a 'new' patent to attack PalWorld, but near the end he clearly calls out that there is a difference between 'legal' and 'legitimate.' I can't seem to find the actual 'throwing a ball to make a thing happen' new patent, but I'd assume PalWorld doesn't infringe the original patent, or Nintendo would have just used that one. The article author also notes how Nintendo applied for a divisional patent near the end of a window for doing so, which presumably extends the total lifetime of the patent protection. A new divisional patent last year probably means we have 40 years of no 'ball-throwing mechanics.'

I hope that this whole thing is a stunt. PalWorld was commercially successful, and even if they lose and have to modify the game, it will remain successful. I think that there's a possibility that the developer and publisher are fighting against software patents kind of in general and used PalWorld as bait that Nintendo fell for.

If they lose, then there will be a swath of gamers who are at least mildly outraged at software patents. Popular opinion can (occasionally) sway policy.

If they win, then we have another chink in the armor of software patents as a whole. See Google vs Oracle regarding the ability to patent an API.

If we can manage to kill software patents for gameplay mechanics, like throwing balls at things, being able to take off and land seamlessly, or having a recurring enemy taunt you, then we get better games that remix things that worked.

Imagine how terribly different games would be if someone had patented "A action where a user presses a button to swing their weapon, and if that weapon hits an enemy, that enemy takes damage."