They're going to get sued into oblivion, so that's one alternative path forward.

Meh. Even small corps often do something well once and then fall to the wayside.Nintendo has been pretty good at recreating their core IP, whether it's the 3D version of Metroid on GC or open-world Zelda on Switch.

If they'd actually bought out the Palworld IP (assuming that was an available option) that would have meant cash for the devs and a way to work with it in a way that was unique but inclusive to the Pokemon franchise. A lot of people are getting tired of the latter because it has become rather stagnant, but the new mechanics with the official Pokemon characters/stats/etc could have benefitted both

Nintendo doesn't do that though. They don't go "wow, this looks cool and there's real interest. Maybe we could work with the dev and make it an official product. They've done most of the work already!" It's lawsuits all the way